<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 3, 1998
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PHILADELPHIA SUBURBAN CORPORATION
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(Exact name of registrant specified in Charter)
Pennsylvania 1-6659 23-1702594
- --------------- ------------ -------------------
(State or other (Commission (IRS Employee
jurisdiction of File Number) Identification No.)
incorporation)
762 Lancaster Avenue
Bryn Mawr, Pennsylvania 19010
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(Address of principal executive offices) Zip Code
Registrant's telephone, including area code: (610) 527-8000
--------------
Not Applicable
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(Former name and former address, if changed since last report)
<PAGE>
Item 5. Other Events.
On February 3, 1998 the Board of Directors of Philadelphia
Suburban Corporation (the "Company") declared a dividend distribution of one
right (a "Right") for each outstanding share of Common Stock, $.50 par value
(each, a "Common Share"), of the Company to stockholders of record at the
close of business on March 1, 1998. Each Right entitles the registered holder
to purchase from the Company a unit consisting of one one-thousandth of a
share (a "Unit") of the Series A Junior Participating Preferred Shares, par
value $1.00 per share, of the Company (the "Preferred Shares"), or a
combination of securities and assets of equivalent value, at a Purchase Price
of $90 per Unit, subject to adjustment. The description and terms of the
Rights are set forth in a Rights Agreement (the "Rights Agreement") between
the Company and ChaseMellon Shareholder Services, L.L.C., as Rights Agent.
Initially, ownership of the Rights will be evidenced by the
Common Share certificates representing shares then outstanding, and no
separate Rights Certificates will be distributed. The Rights will separate
from the Common Shares and a distribution date will occur (the "Distribution
Date") upon the earlier of (i) ten (10) business days following a public
announcement that a person or group of affiliated or associated persons (an
"Acquiring Person") has acquired, or obtained the right to acquire, beneficial
ownership of 20% or more of the outstanding Common Shares (the "Stock
Acquisition Date"), or (ii) within ten (10) business days (or such later date
as may be determined by the Board of Directors prior to such time as any
person or group of affiliated or associated persons becomes an Acquiring
Person) following the commencement of a tender offer or exchange offer that
would result in a person or group (excluding the Company and its subsidiaries
and benefit plans) beneficially owning 20% or more of the outstanding Common
Shares. Until the Distribution Date, the Rights will be evidenced by the
Common Share certificates and will be transferred with and only with such
Common Share certificates. Therefore, the surrender for transfer of any
certificates for Common Shares outstanding will also constitute the transfer
of the Rights associated with the Common Shares represented by such
certificate.
The Rights are not exercisable until the Distribution Date
and will expire at the close of business on March 1, 2008, unless earlier
redeemed by the Company as described below or unless a transaction under
Section 13(d) of the Rights Agreement has occurred.
As soon as practicable after the Distribution Date, Rights
Certificates will be mailed to holders of record of the Common Shares as of
the close of business on the Distribution Date and thereafter, the separate
Rights Certificates alone will represent the Rights. Except as otherwise
determined by the Board of Directors, and except in connection with the
exercise of employee stock options or stock appreciation rights or under any
other benefit plan for employees or directors or in connection with the
exercise of warrants or conversion of convertible securities, only Common
Shares issued after March 1, 1998 and prior to the Distribution Date will be
issued with Rights.
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Except in the circumstances described below, after the
Distribution Date each Right will be exercisable into one one-thousandth of a
Preferred Share (a "Preferred Share Fraction"). Each Preferred Share Fraction
carries voting and dividend rights that are intended to produce the equivalent
of one Common Share. The voting and dividend rights of the Preferred Shares
are subject to adjustment in the event of dividends, subdivisions and
combinations with respect to the Common Shares of the Company. In lieu of
issuing certificates for Preferred Share Fractions which are less than an
integral multiple of one Preferred Share (i.e. 1,000 Preferred Share
Fractions), the Company may pay cash representing the current market value of
the Preferred Share Fractions.
In the event that at any time following the Stock
Acquisition Date, (i) the Company is the surviving corporation in a merger
with an Acquiring Person and its Common Shares remain outstanding, (ii) a
person, including affiliates and associates, becomes the beneficial owner of
more than 20% of the then outstanding Common Shares (unless such acquisition
is made pursuant to a tender or exchange offer for all outstanding Common
Shares upon terms and conditions determined by at least a majority of the
Continuing Directors (as defined below), after receiving advice from one or
more nationally recognized investment banking firms, to be in the best
interests of the Company and its stockholders (a "Qualifying Offer")), (iii)
an Acquiring Person engages in one or more "self-dealing" transactions, as set
forth in the Rights Agreement or (iv) during such time as there is an
Acquiring Person an event occurs that results in such Acquiring Person's
ownership interest being increased by more than one percent (1%) (e.g., a
reverse stock split), each holder of a Right will thereafter have the right to
receive, upon exercise, Common Shares (or, in certain circumstances, cash,
property or other securities of the Company) having a value equal to
approximately two times the exercise price of the Right. In lieu of requiring
payment of the Purchase Price upon exercise of the Rights following any such
event, the Company, by action of a majority of the Continuing Directors in
office at the time, may permit the holders simply to surrender the Rights, in
which event they will be entitled to receive Common Shares (and other
property, as the case may be) with a value of 50% of what could be purchased
by payment of the full Purchase Price. Notwithstanding any of the foregoing,
following the occurrence of any of the events set forth in clauses (i), (ii),
(iii) or (iv) of this paragraph, all Rights that are, or (under certain
circumstances specified in the Rights Agreement) were, beneficially owned by
any Acquiring Person who was involved in the transaction giving rise to any
such event will be null and void. However, Rights are not exercisable
following the occurrence of any of the events set forth above until such time
as the Rights are no longer redeemable by the Company as set forth below.
For example, at an exercise price of $90 per Right, each
Right not otherwise voided following an event set forth in the preceding
paragraph would entitle its holder to purchase $180 worth of Common Shares (or
other consideration, as noted above) for $90. Assuming that the Common Shares
had a per share value of $30 at such time, the holder of each valid Right
would be entitled to purchase six Common Shares for $90. Alternatively, the
Company could permit the holder to surrender each Right in exchange for stock
equivalent to three Common Shares (or cash or other securities with a value of
$90) without the payment of any consideration other than the surrender of the
Right.
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In the event that, at any time following the Stock
Acquisition Date, (i) the Company is acquired in a merger or other business
combination transaction in which the Company is not the surviving corporation
(other than a merger that follows a Qualifying Offer), or (ii) 50% or more of
the Company's assets or earning power is sold or transferred, each holder of a
Right (except Rights that previously have been voided as set forth above)
shall thereafter have the right to receive, upon exercise, common shares of
the acquiring company having a value equal to approximately two times the
exercise price of the Right. Again, provision is made to permit, at the option
of the Company, surrender of the Rights in exchange for one-half of the value
otherwise purchasable. The events set forth in this paragraph and in the
second preceding paragraph are referred to as the "Triggering Events."
The Purchase Price payable, and the number of Units of
Preferred Shares or other securities or property issuable upon exercise of the
Rights are subject to adjustment from time to time to prevent dilution (i) in
the event of a stock dividend on, or a subdivision, combination or
reclassification of, the Preferred Shares, (ii) if holders of the Preferred
Shares are granted certain rights or warrants to subscribe for Preferred
Shares or convertible securities at less than the current market price of the
Preferred Shares, or (iii) upon the distribution to holders of the Preferred
Shares of evidences of indebtedness or assets (excluding regular quarterly
dividends) or of subscription rights or warrants (other than those referred to
above). Similar dilution protection exists with respect to transactions
affecting Common Shares similar to those described in clauses (i) - (iii)
above.
With certain exceptions, no adjustment in the Purchase Price
will be required until cumulative adjustments amount to at least 1% of the
Purchase Price. No fractional Units will be issued and, in lieu thereof, an
adjustment in cash will be made based on the market price of the Preferred
Shares on the last trading date prior to the date of exercise.
At any time until ten days following the Stock Acquisition
Date, the Company may redeem the Rights in whole, but not in part, at a price
of $.01 per Right. That ten day redemption period may be extended by the Board
of Directors so long as the Rights are still redeemable. Under certain
circumstances set forth in the Rights Agreement, the decision to redeem will
require the concurrence of a majority of the Continuing Directors (as defined
below). Immediately upon the action of the Board of Directors ordering
redemption of the Rights, with, where required, the concurrence of the
Continuing Directors, the Rights will terminate and the only right of the
holders of Rights will be to receive the $.01 redemption price.
The term "Continuing Directors" means any member of the
Board of Directors of the Company who was a member of the Board prior to the
date of the Rights Agreement, and any person who is subsequently elected to
the Board if such person's nomination for election to the Board is recommended
or approved by a majority of the Continuing Directors, but shall not include
an Acquiring Person, or an affiliate or associate of an Acquiring Person, or
any representative of the foregoing entities.
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Until a Right is exercised, the holder thereof, as such,
will have no rights as a stockholder of the Company, including, without
limitation, the right to vote or to receive dividends. While the distribution
of the Rights will not be taxable to stockholders or to the Company,
stockholders may, depending upon the circumstances, recognize taxable income
in the event that the Rights become exercisable for Preferred Shares (or other
consideration) of the Company or for common shares of the acquiring company as
set forth above.
Other than those provisions relating to certain principal
economic terms of the Right, any of the provisions of the Rights Agreement may
be amended by the Board of Directors of the Company prior to the Distribution
Date. After the Distribution Date, the provisions of the Rights Agreement may
be amended by the Board (in certain circumstances with the concurrence of a
majority of the Continuing Directors) in order to cure any ambiguity, to make
changes that do not adversely affect the interests of holders of Rights
(excluding the interests of any Acquiring Person), or to shorten or lengthen
any time period under the Rights Agreement; provided, however, that no
amendment to adjust the time period governing redemption shall be made at such
time as the Rights are not redeemable.
A copy of the Rights Agreement is being filed with the
Securities and Exchange Commission as an Exhibit to a Registration Statement
on Form 8-A. A copy of the Rights Agreement is available free of charge from
the Company. This summary description of the Rights does not purport to be
complete and is qualified in its entirety by reference to the Rights
Agreement, which is incorporated herein by reference.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits.
Exhibit No. Exhibit
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4 Rights Agreement, dated as of March 1, 1998,
between Philadelphia Suburban Corporation and
ChaseMellon Shareholder Services, L.L.C., as
Rights Agent.
99 Press Release dated February 3, 1998.
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<PAGE>
Signature
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
PHILADELPHIA SUBURBAN CORPORATION
By: /s/ Roy H. Stahl
-------------------------------------------
Name: Roy H. Stahl
Title: Vice President and General Counsel
Dated: February 6, 1998
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<PAGE>
Exhibit No. Exhibit Page
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4 Rights Agreement, dated as of March 1, 1998,
between Philadelphia Suburban Corporation and
ChaseMellon Shareholder Services, L.L.C., as
Rights Agent.
99 Press Release dated February 3, 1998.
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<PAGE>
==============================================================================
PHILADELPHIA SUBURBAN CORPORATION
and
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
as Rights Agent
RIGHTS AGREEMENT
Dated as of March 1, 1998
==============================================================================
<PAGE>
<TABLE>
<CAPTION>
Table of Contents
Section Page
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<S> <C>
1. Certain Definitions. .........................................................................................2
2. Appointment of Rights Agent. .................................................................................5
3. Issue of Rights Certificates. ................................................................................6
4. Form of Rights Certificates. .................................................................................8
5. Countersignature and Registration.............................................................................9
6. Transfer, Split Up, Combination and Exchange of Rights Certificates; Mutilated, Destroyed,
Lost or Stolen Rights Certificates.......................................................................9
7. Exercise of Rights; Purchase Price; Expiration Date of Rights................................................10
8. Cancellation and Destruction of Rights Certificates. ........................................................13
9. Reservation and Availability of Capital Stock; Registration of Securities....................................13
10. Capital Stock Record Date. .................................................................................15
11. Adjustment of Purchase Price, Number and Kind of Shares or Number of Rights. ...............................15
12. Certificate of Adjusted Purchase Price or Number of Shares. ................................................16
13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power........................................26
14. Fractional Rights and Fractional Shares.....................................................................29
15. Rights of Action. ..........................................................................................31
16. Agreement of Rights Holders. ...............................................................................31
17. Rights Certificate Holder Not Deemed a Shareholder. .......................................................32
18. Concerning the Rights Agent.................................................................................32
19. Merger or Consolidation or Change of Name of Rights Agent...................................................33
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Section Page
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<S> <C>
20. Duties of Rights Agent. ....................................................................................33
21. Change of Rights Agent. ....................................................................................36
22. Issuance of New Rights Certificates..........................................................................37
23. Redemption and Termination..................................................................................37
24. Exchange.....................................................................................................38
25. Notice of Certain Events....................................................................................39
26. Notices. ...................................................................................................40
27. Supplements and Amendments..................................................................................41
28. Successors. ................................................................................................42
29. Determinations and Actions by the Board of Directors, etc. .................................................42
30. Benefits of this Agreement. ................................................................................43
31. Severability. ..............................................................................................43
32. Governing Law. .............................................................................................43
33. Counterparts. ..............................................................................................44
34. Descriptive Headings. ......................................................................................44
Exhibit A Resolution of the Board of Directors with respect to
Series A Junior Participating Preferred Shares
Exhibit B Form of Rights Certificate
</TABLE>
<PAGE>
RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of March 1, 1998 (the
"Agreement"), between PHILADELPHIA SUBURBAN CORPORATION, a Pennsylvania
corporation (the "Company"), and CHASEMELLON SHAREHOLDER SERVICES, L.L.C., a
New Jersey limited liability company (the "Rights Agent").
W I T N E S S E T H
WHEREAS, on February 3, 1998 (the "Rights Dividend
Declaration Date"), the Board of Directors of the Company authorized and
declared a dividend distribution of one Right for each Common Share (as
hereinafter defined) of the Company outstanding at the close of business on
March 1, 1998 (the "Record Date") (which for these purposes shall include all
Common Shares presently entitled to receive dividends) and has authorized the
issuance of one Right (as such number may hereafter be adjusted pursuant to
the provisions of Section 11(i) hereof) for each Common Share of the Company
issued between the Record Date (whether originally issued or delivered from
the Company's treasury) and the Distribution Date (as hereinafter defined),
each Right initially representing the right to purchase one one-thousandth of
a Preferred Share (as hereinafter defined) of the Company having the rights,
powers and preferences set forth in the form of the Resolution of the Board of
Directors attached hereto as Exhibit A, upon the terms and subject to the
conditions hereinafter set forth (the "Rights"); and
WHEREAS, the Rights will be held by the Rights Agent under
this Agreement as trustee for the shareholders of the Company until the
Distribution Date; and
WHEREAS, the Board of Directors of the Company has
considered whether approval of this Agreement and the distribution of the
Rights is in the best interests of the Company and all other pertinent
factors; and
WHEREAS, the Board of Directors of the Company has concluded
that approval of this Agreement and the distribution of the Rights is in the
best interests of the Company because the existence of the Rights will help
(i) reduce the risk of coercive two-tiered, front-end loaded or partial offers
that may not offer fair value to all shareholders, (ii) mitigate against
market accumulators who through open market and/or private purchases may
achieve a position of substantial influence or control without paying to
selling or remaining shareholders a fair control premium, (iii) deter market
accumulators who are simply interested in putting the Company into "play,"
(iv) restrict self-dealing by a substantial shareholder, and (v) preserve the
Board of Directors' bargaining power and flexibility to deal with third-party
acquirors, to pursue the business strategies of the Company and to otherwise
seek to maximize values for all shareholders.
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein set forth, and intending to be legally bound hereby,
the parties hereby agree as follows:
<PAGE>
Section 1. Certain Definitions. For purposes of this
Agreement, the following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who or
which, together with all Affiliates and Associates of such Person, shall be
the Beneficial Owner of 20% or more of the Common Shares then outstanding, but
shall not include the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or of any Subsidiary of the Company, or any Person
or entity organized, appointed or established by the Company for or pursuant
to the terms of any such plan. Notwithstanding the foregoing, no Person shall
become an "Acquiring Person" as the result of an acquisition of Common Shares
by the Company which, by reducing the number of Common Shares outstanding,
increases the proportionate number of Common Shares beneficially owned by such
Person to 20% or more of the Common Shares then outstanding; provided,
however, that if a Person shall become the Beneficial Owner of 20% or more of
the then outstanding Common Shares by reason of Common Shares purchased by the
Company and shall, after such share purchases by the Company, become the
Beneficial Owner of any additional Common Shares, then such Person shall be
deemed to be an "Acquiring Person." Notwithstanding the foregoing, if a
majority of the Continuing Directors then in office determines in good faith
that a Person who would otherwise be an "Acquiring Person", as defined
pursuant to the foregoing provisions of this paragraph (a), has become such
inadvertently, and such Person divests as promptly as practicable a sufficient
number of Common Shares so that such Person would no longer be an Acquiring
Person, as defined pursuant to the foregoing provisions of this paragraph (a),
then such Person shall not be deemed to be an "Acquiring Person" for purposes
of this Agreement.
(b) "Affiliate" and "Associate" shall have the
respective meanings ascribed to such terms in Rule 12b-2 of the General Rules
and Regulations under the Securities Exchange Act of 1934, as amended and in
effect on the date hereof (the "Exchange Act").
(c) A Person shall be deemed the "Beneficial Owner"
of, and shall be deemed to "beneficially own," any securities:
(i) that such Person or any of such Person's
Affiliates or Associates, directly or indirectly, has the right to
acquire (whether such right is exercisable immediately or only after
the passage of time) pursuant to any agreement, arrangement or
understanding (whether or not in writing) or upon the exercise of
conversion rights, exchange rights, rights, warrants or options, or
otherwise; provided, however, that a Person shall not be deemed the
"Beneficial Owner" of, or to "beneficially own," (A) securities
tendered pursuant to a tender or exchange offer made by such Person
or any of such Person's Affiliates or
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Associates until such tendered securities are accepted for payment,
purchase or exchange, or (B) securities issuable upon exercise of
Rights at any time prior to the occurrence of a Triggering Event, or
(C) securities issuable upon exercise of Rights from and after the
occurrence of a Triggering Event which Rights were acquired by such
Person or any of such Person's Affiliates or Associates prior to the
Distribution Date or pursuant to Section 3(a) or Section 22 hereof
(the "Original Rights") or pursuant to Section 11(i) hereof in
connection with an adjustment made with respect to any Original
Rights;
(ii) that such Person or any of such Person's
Affiliates or Associates, directly or indirectly, has the right to
vote or dispose of or has "beneficial ownership" of (as determined
pursuant to Rule 13d-3 of the General Rules and Regulations under the
Exchange Act), including without limitation pursuant to any
agreement, arrangement or understanding (whether or not in writing);
provided, however, that a Person shall not be deemed the "Beneficial
Owner" of, or to "beneficially own," any security under this
subparagraph (ii) as a result of an oral or written agreement,
arrangement or understanding to vote such security if such agreement,
arrangement or understanding: (A) arises solely from a revocable
proxy given in response to a public proxy or consent solicitation
made pursuant to, and in accordance with, the applicable provisions
of the General Rules and Regulations under the Exchange Act, and (B)
is not also then reportable by such Person on Schedule 13D under the
Exchange Act (or any comparable or successor report); or
(iii) that are beneficially owned, directly or
indirectly, by any other Person (or any Affiliate or Associate
thereof) with which such Person (or any of such Person's Affiliates
or Associates) has any agreement, arrangement or understanding
(whether or not in writing), for the purpose of acquiring, holding,
voting (except pursuant to a revocable proxy as described in the
proviso to subparagraph (ii) of this paragraph (c)) or disposing of
any voting securities of the Company,
provided, however, that nothing in this paragraph (c) shall cause a person
engaged in business as an underwriter of securities to be the "Beneficial
Owner" of, or to "beneficially own," any securities acquired through such
Person's participation in good faith in a firm commitment underwriting until
the expiration of forty days after the date of such acquisition.
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(d) "Business Day" shall mean any day other than a
Saturday, Sunday or a day on which banking institutions in the State of New
Jersey or the Commonwealth of Pennsylvania are authorized or obligated by law
or executive order to close.
(e) "Close of Business" on any given date shall
mean 5:00 P.M., Philadelphia time, on such date; provided, however, that if
such date is not a Business Day it shall mean 5:00 P.M., Philadelphia time, on
the next succeeding Business Day.
(f) "Common Share" shall mean, when used with
reference to the Company, a share of common stock, par value $.50 per share,
of the Company and, to the extent that there are not a sufficient number of
Common Shares authorized to permit the full exercise of the Rights, shares of
any other class or series of the Company designated for such purpose
containing terms substantially similar to the terms of the Common Shares,
except that "Common Share" when used with reference to any Person other than
the Company shall mean the shares of common stock of such Person with the
greatest voting power, or the equity securities or other equity interest
having power to control or direct the management, of such Person.
(g) "Continuing Director" shall mean (i) any member
of the Board of Directors of the Company, while such Person is a member of
such Board, who is not an Acquiring Person, or an Affiliate or Associate of an
Acquiring Person, or a representative of an Acquiring Person or of any such
Affiliate or Associate, and was a member of such Board prior to the date of
this Agreement, or (ii) any Person who subsequently becomes a member of the
Board, while such Person is a member of such Board, who is not an Acquiring
Person, or an Affiliate or Associate of an Acquiring Person, or a
representative of an Acquiring Person or of any such Affiliate or Associate,
if such Person's nomination for election or election to the Board is
recommended or approved by a majority of the Continuing Directors.
(h) "Distribution Date" shall have the meaning set
forth in Section 3 hereof.
(i) "Expiration Date" shall have the meaning set
forth in Section 7(a) hereof.
(j) "Person" shall mean any individual, firm,
corporation, partnership, limited liability company or other entity.
(k) "Preferred Share" shall mean a share of Series
A Junior Participating Preferred Shares, par value $1.00 per share, of the
Company and, to the extent that there are not a sufficient number of shares of
Series A Junior Participating Preferred Shares authorized to permit
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the full exercise of the Rights, shares of any other series of Series
Preferred Stock of the Company designated for such purpose containing terms
substantially similar to the terms of the Series A Junior Participating
Preferred Shares.
(l) "Preferred Share Fraction" shall mean one
one-thousandth of a Preferred Share.
(m) "Section 11(a)(ii) Event" shall mean any event
described in Section 11(a)(ii) (A), (B) or (C) hereof.
(n) "Section 13 Event" shall mean any event
described in clauses (x), (y) or (z) of Section 13(a) hereof.
(o) "Stock Acquisition Date" shall mean the first
date of public announcement (which, for purposes of this definition, shall
include, without limitation, a report filed pursuant to Section 13(d) under
the Exchange Act) by the Company or an Acquiring Person that an Acquiring
Person has become such.
(p) "Subsidiary" shall have the meaning ascribed to
such term in Rule 12b-2 of the General Rules and Regulations under the
Exchange Act.
(q) "Trading Day" shall have the meaning set forth
in Section 11(d)(i) hereof.
(r) "Triggering Event" shall mean any Section
11(a)(ii) Event or any Section 13 Event.
Unless otherwise specified, where reference is made
in this Agreement to sections of, and the General Rules and Regulations under,
the Exchange Act, such reference shall mean such sections and rules as amended
from time to time and any successor provisions thereto.
Section 2. Appointment of Rights Agent. The Company hereby
appoints the Rights Agent to act as agent for the Company in accordance with
the terms and conditions hereof, and the Rights Agent hereby accepts such
appointment. The Company may from time to time appoint such Co-Rights Agents
as it may deem necessary or desirable.
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Section 3. Issue of Rights Certificates.
(a) Until the earlier of (i) the Close of Business
on the tenth Business Day after a Stock Acquisition Date involving an
Acquiring Person that has become such in a transaction as to which the Board
of Directors has not made the determination referred to in Section
11(a)(ii)(B) hereof, or (ii) within ten (10) Business Days (or such later date
as may be determined by action of the Board of Directors prior to such time
any Person becomes an Acquiring Person) after the date that a tender or
exchange offer by any Person (other than the Company, any Subsidiary of the
Company, any employee benefit plan of the Company or of any Subsidiary of the
Company, or any Person or entity organized, appointed or established by the
Company for or pursuant to the terms of any such plan) is first published or
sent or given within the meaning of Rule 14d-2(a) of the General Rules and
Regulations under the Exchange Act, if upon consummation thereof, such Person
would be the Beneficial Owner of 20% or more of the Common Shares then
outstanding (the earlier of (i) and (ii) being herein referred to as the
"Distribution Date"), (x) beneficial interests in the Rights will be evidenced
(subject to the provisions of paragraph (b) of this Section 3) by the
certificates for the Common Shares registered in the names of the holders of
the Common Shares (which certificates for Common Shares shall be deemed also
to be certificates for beneficial interests in the Rights) and not by separate
certificates, and (y) the Rights and beneficial interests therein will be
transferable only in connection with the transfer of the underlying Common
Shares (including a transfer to the Company). The Company must promptly notify
the Rights Agent of such Distribution Date and request that its transfer agent
provide the Rights Agent with a list of the record holders of the Company's
Common Shares as of the close of business on the Distribution Date. As soon as
practicable after the Rights Agent receives such notice and list, the Rights
Agent will send by first-class, postage prepaid mail, to each record holder of
the Common Shares as of the close of business on the Distribution Date, at the
address of such holder shown on the records of the Company, one or more rights
certificates, in substantially the form of Exhibit B hereto (the "Rights
Certificates"), evidencing one Right for each Common Share so held, subject to
adjustment as provided herein. In the event that an adjustment in the number
of Rights per Common Share has been made pursuant to Section 11(p) hereof, at
the time of distribution of the Rights Certificates, the Company shall make
the necessary and appropriate rounding adjustments (in accordance with Section
14(a) hereof) so that Rights Certificates representing only whole numbers of
Rights are distributed and cash is paid in lieu of any fractional Rights. As
of and after the Distribution Date, the Rights will be evidenced solely by
such Rights Certificates.
(b) With respect to certificates for the Common
Shares outstanding as of the Record Date, until the Distribution Date, the
registered holders of the Common Shares shall also be the registered holders
of the beneficial interests in the associated Rights. Until the earlier of the
Distribution Date or the Expiration Date (as such term is defined in Section 7
hereof), the
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transfer of any certificates representing Common Shares in respect of which
Rights have been issued shall also constitute the transfer of the Rights
associated with such Common Shares. Certificates issued after the Record Date
upon the transfer of Common Shares outstanding on the Record Date shall bear
the legend set forth in subsection (c).
(c) Except as provided in Section 22 hereof, Rights
shall be issued in respect of all Common Shares that are issued (whether
originally issued or delivered from the Company's treasury) after the Record
Date but prior to the earlier of the Distribution Date or the Expiration Date.
Certificates representing such Common Shares shall also be deemed to be
certificates for beneficial interests in the associated Rights, and shall bear
the following legend:
"This certificate also evidences a beneficial
interest in and entitles the holder hereof to certain Rights as set
forth in the Rights Agreement between Philadelphia Suburban
Corporation (the "Company") and ChaseMellon Shareholder Services,
L.L.C. (the "Rights Agent") dated as of March 1, 1998 (the "Rights
Agreement"), and as the same may be amended from time to time, the
terms of which are hereby incorporated herein by reference and a copy
of which is on file at the principal offices of the Company. Under
certain circumstances, as set forth in the Rights Agreement, such
Rights will be evidenced by separate certificates and beneficial
interests therein will no longer be evidenced by this certificate.
The Company will mail to the holder of this certificate a copy of the
Rights Agreement, as in effect on the date of mailing, without charge
promptly after receipt of a written request therefor. Under certain
circumstances set forth in the Rights Agreement, Rights issued to, or
held by, any Person who is, was or becomes an Acquiring Person or any
Affiliate or Associate thereof (as such terms are defined in the
Rights Agreement), whether currently held by or on behalf of such
Person or by any subsequent holder, may become null and void."
With respect to such certificates containing the foregoing legend, until the
earlier of (i) the Distribution Date or (ii) the Expiration Date, beneficial
interests in the Rights associated with the Common Shares represented by such
certificates shall be evidenced by such certificates alone and registered
holders of Common Shares shall also be the registered holders of beneficial
interests in the associated Rights, and the transfer of any of such
certificates shall also constitute the transfer of beneficial interests in the
Rights associated with the Common Shares represented by such certificates.
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Section 4. Form of Rights Certificates.
(a) The Rights Certificates (and the forms of
election to purchase and of assignment to be printed on the reverse thereof)
shall each be substantially in the form set forth in Exhibit B hereto and may
have such marks of identification or designation and such legends, summaries
or endorsements printed thereon as the Company may deem appropriate (which do
not affect the duties or responsibilities of the Rights Agent) and as are not
inconsistent with the provisions of this Agreement, or as may be required to
comply with any applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange or the Nasdaq
Stock Market on which the Rights may from time to time be listed, or to
conform to usage. Subject to the provisions of Section 11 and Section 22
hereof, the Rights Certificates, whenever distributed, shall entitle the
holders thereof to purchase such number of Preferred Share Fractions as shall
be set forth therein at the price set forth therein (such exercise price per
Preferred Share Fraction, the "Purchase Price"), but the amount and type of
securities purchasable upon the exercise of each Right and the Purchase Price
thereof shall be subject to adjustment as provided herein.
(b) Any Rights Certificate issued pursuant to
Section 3(a) or Section 22 hereof that represents Rights that the Company
knows are beneficially owned by: (i) an Acquiring Person or any Associate or
Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring Person (or
of any such Associate or Affiliate) who becomes a transferee after the
Acquiring Person becomes such, or (iii) a transferee of an Acquiring Person
(or of any such Associate or Affiliate) who becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and receives such Rights
pursuant to either (A) a transfer (whether or not for consideration) from the
Acquiring Person to holders of equity interests in such Acquiring Person or to
any Person with whom such Acquiring Person has any continuing oral or written
plan, agreement, arrangement or understanding regarding the transferred Rights
or (B) a transfer that the Board of Directors of the Company has determined is
part of an oral or written plan, agreement, arrangement or understanding that
has as a primary purpose or effect avoidance of Section 7(e) hereof, and
provided that the Company shall have notified the Rights Agent that this
Section 4(b) applies, any Rights Certificate issued pursuant to Section 6 or
Section 11 hereof upon transfer, exchange, replacement or adjustment of any
other Rights Certificate referred to in this sentence, shall contain (to the
extent feasible) the following legend:
"The Rights represented by this Rights Certificate are or were
beneficially owned by a Person who was or became an Acquiring Person
or an Affiliate or Associate of an Acquiring Person (as such terms
are defined in the Rights Agreement). Accordingly, this Rights
Certificate and the Rights represented hereby may
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become null and void in the circumstances specified in Section 7(e)
of such Agreement."
Section 5. Countersignature and Registration.
(a) The Rights Certificates shall be executed on
behalf of the Company by its Chairman of the Board, its President or any Vice
President, either manually or by facsimile signature, and shall have affixed
thereto the Company's seal or a facsimile thereof which shall be attested by
the Secretary or an Assistant Secretary of the Company, either manually or by
facsimile signature. The Rights Certificates shall be manually countersigned
by the Rights Agent and shall not be valid for any purpose unless so
countersigned. In case any officer of the Company who shall have signed any of
the Rights Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Rights Certificates, nevertheless, may be countersigned by the Rights
Agent and issued and delivered by the Company with the same force and effect
as though the Person who signed such Rights Certificates had not ceased to be
such officer of the Company; and any Rights Certificates may be signed on
behalf of the Company by any Person who, at the actual date of the execution
of such Rights Certificate, shall be a proper officer of the Company to sign
such Rights Certificate, although at the date of the execution of this
Agreement any such Person was not such an officer.
(b) Following the Distribution Date and upon
receipt by the Rights Agent of the notice and list of recordholders of the
Rights referred to in Section 3(a), the Rights Agent will keep or cause to be
kept, at its office or offices designated pursuant to Section 25 hereof, books
for registration and transfer of the Rights Certificates issued hereunder.
Such books shall show the names and addresses of the respective holders of the
Rights Certificates, the number of Rights evidenced on its face by each of the
Rights Certificates, the Certificate number and the date of each of the Rights
Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of
Rights Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates.
(a) Subject to the provisions of Section 4(b),
Section 7(e) and Section 14 hereof, at any time after the Close of Business on
the Distribution Date, and at or prior to the Close of Business on the
Expiration Date, any Rights Certificate or Certificates may be transferred,
split up, combined or exchanged for another Rights Certificate or
Certificates, entitling the registered holder to purchase a like number of
Preferred Share Fractions (or, following a Triggering Event, Common Shares or
other securities, cash or other assets, as the case may be), as the Rights
Certificate or Certificates surrendered then entitled such holder or
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former holder in the case of a transfer to purchase. Any registered holder
desiring to transfer, split up, combine or exchange any Rights Certificate or
Certificates shall make such request in writing delivered to the Rights Agent,
and shall surrender the Rights Certificate or Certificates to be transferred,
split up, combined or exchanged at the office of the Rights Agent designated
for such purpose. Neither the Rights Agent nor the Company shall be obligated
to take any action whatsoever with respect to the transfer of any such
surrendered Rights Certificate or Certificates until the registered holder
shall have completed and signed the certificate contained in the form of
assignment on the reverse side of such Rights Certificate and shall have
provided such additional evidence of the identity of the Beneficial Owner (or
former Beneficial Owner) or Affiliates or Associates thereof as the Company or
the Rights Agent shall reasonably request. Thereupon the Rights Agent shall,
subject to Section 4(b), Section 7(e) and Section 14 hereof, countersign and
deliver to the Person entitled thereto a Rights Certificate or Rights
Certificates, as the case may be, as so requested. The Rights Agent shall not
be obligated to process the transaction until it has received evidence that
all taxes and charges arising from the transaction have been paid. The Company
may require payment of a sum sufficient to cover any tax or governmental
charge that may be imposed in connection with any transfer, split up,
combination or exchange of Rights Certificates.
(b) Upon receipt by the Company and the Rights
Agent of evidence reasonably satisfactory to them of the loss, theft,
destruction or mutilation of a Rights Certificate, and, in case of loss, theft
or destruction, of indemnity or security satisfactory to them, and
reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and cancellation of
the Rights Certificate if mutilated, the Company will execute and deliver a
new Rights Certificate of like tenor to the Rights Agent for countersignature
and delivery to the registered owner in lieu of the Rights Certificate so
lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration
Date of Rights.
(a) Subject to subsection (e), the registered
holder of any Rights Certificate may exercise the Rights evidenced thereby
(except as otherwise provided herein including, without limitation, the
restrictions on exercisability set forth in Section 9(c), Section 11(a)(iii)
and Section 23(a) hereof) in whole or in part at any time after the
Distribution Date upon surrender of the Rights Certificate, with the form of
election to purchase and the certificate on the reverse side thereof duly
executed, to the Rights Agent at the office of the Rights Agent designated for
such purpose, together with payment of the aggregate Purchase Price (except as
provided in Section 11(q) hereof) with respect to the total number of
Preferred Share Fractions (or Common Shares, other securities, cash or other
assets, as the case may be) as to which such surrendered Rights are then
exercisable (except as provided in Section 11(q) hereof), at or prior
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to the earliest of (i) the Close of Business on March 1, 2008 (the "Final
Expiration Date"), (ii) the consummation of a transaction contemplated by
Section 13(d) hereof, or (iii) the time at which the Rights are redeemed or
terminated as provided in Section 23 hereof (the earliest of (i), (ii) and
(iii) being herein referred to as the "Expiration Date").
(b) The Purchase Price for each Preferred Share
Fraction pursuant to the exercise of a Right shall initially be $90, and shall
be subject to adjustment from time to time as provided in Sections 11 and
13(a) hereof and shall be payable in accordance with subsection (c).
(c) Upon receipt of a Rights Certificate
representing exercisable Rights, with the form of election to purchase and the
certificate duly executed, accompanied by payment, with respect to each Right
so exercised, of the Purchase Price per Preferred Share Fraction (or Common
Shares, other securities, cash or other assets, as the case may be) to be
purchased as set forth below and an amount equal to any applicable tax or
governmental charge, the Rights Agent shall, subject to Section 20(k) and
Section 14(b) hereof, thereupon promptly (i) (A) requisition from any transfer
agent of the Preferred Shares (or make available, if the Rights Agent is the
transfer agent for the Common Shares) certificates for the total number of
Preferred Shares to be purchased and the Company hereby irrevocably authorizes
its transfer agent to comply with all such requests, or (B) if the Company
shall have elected to deposit some or all of the total number of Preferred
Shares issuable upon exercise of the Rights hereunder with a depositary agent,
requisition from the depositary agent depositary receipts representing such
number of Preferred Share Fractions as are to be purchased (in which case
certificates for the Preferred Shares represented by such receipts shall be
deposited by the transfer agent with the depositary agent) and the Company
will direct the depositary agent to comply with such request, (ii) requisition
from the Company the amount of cash, if any, to be paid in lieu of fractional
shares in accordance with Section 14 hereof, (iii) after receipt of such
certificates or depositary receipts, cause the same to be delivered to or upon
the order of the registered holder of such Rights Certificate, registered in
such name or names as may be designated by such holder, and (iv) after receipt
thereof, deliver such cash, if any, to or upon the order of the registered
holder of such Rights Certificate. The payment of the Purchase Price (as such
amount may be reduced pursuant to Section 11(a)(iii) hereof) may be made, at
the election of the holder of the Rights Certificate, (x) in cash or by
certified bank check or money order payable to the order of the Company or (y)
by delivery of Rights if and to the extent authorized by Section 11(q) hereof.
In the event that the Company is obligated to issue other securities of the
Company (including Common Shares) pay cash and/or distribute other property
pursuant to Section 11(a) hereof, the Company will make all arrangements
necessary so that such other securities, cash and/or other property are
available for distribution by the Rights Agent, if and when necessary to
comply with this agreement.
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(d) In case the registered holder of any Rights
Certificate shall exercise less than all the Rights evidenced thereby, a new
Rights Certificate evidencing Rights equivalent to the Rights remaining
unexercised shall be issued by the Rights Agent and delivered to, or upon the
order of, the registered holder of such Rights Certificate, registered in such
name or names as may be designated by such holder, subject to the provisions
of Section 6 and Section 14 hereof.
(e) Notwithstanding anything in this Agreement to
the contrary, from and after the first occurrence of a Section 11(a)(ii)
Event, any Rights beneficially owned by (i) an Acquiring Person or an
Associate or Affiliate of an Acquiring Person, (ii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee after the Acquiring Person becomes such, or (iii) a transferee of
an Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee prior to or concurrently with the Acquiring Person becoming such
and receives such Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person to holders of equity interests in
such Acquiring Person or to any Person with whom the Acquiring Person has any
continuing oral or written plan, agreement, arrangement or understanding
regarding the transferred Rights or (B) a transfer which the Board of
Directors of the Company has determined is part of an oral or written plan,
agreement, arrangement or understanding which has as a primary purpose or
effect the avoidance of this Section 7(e), shall become null and void without
any further action and no holder of such Rights shall have any rights
whatsoever with respect to such Rights, whether under any provision of this
Agreement or otherwise; provided, however, that the Rights held by an
Acquiring Person, an Affiliate or Associate of an Acquiring Person or the
transferees of such persons referred to above shall not be voided unless the
Acquiring Person in question or an Affiliate or Associate of such Acquiring
Person shall be involved in the transaction giving rise to the Section
11(a)(ii) Event. The Company shall notify the Rights Agent when this Section
7(e) applies and shall use all reasonable efforts to insure that the
provisions of this Section 7(e) and Section 4(b) hereof are complied with, but
neither the Company nor the Rights Agent shall have any liability to any
holder of Rights Certificates or other Person as a result of the Company's
failure to make any determinations with respect to an Acquiring Person or its
Affiliates, Associates or transferees hereunder.
(f) Notwithstanding anything in this Agreement to
the contrary, neither the Rights Agent nor the Company shall be obligated to
undertake any action with respect to a registered holder upon the occurrence
of any purported exercise as set forth in this Section 7 unless such
registered holder shall have (i) properly completed and signed the certificate
contained in the form of election to purchase set forth on the reverse side of
the Rights Certificate surrendered for such exercise, and (ii) provided such
additional evidence of the
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identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall or the Rights Agent reasonably
request.
Section 8. Cancellation and Destruction of Rights
Certificates. All Rights Certificates surrendered for the purpose of exercise,
transfer, split up, combination or exchange shall, if surrendered to the
Company or any of its agents, be delivered to the Rights Agent for
cancellation or in canceled form, or, if surrendered to the Rights Agent,
shall be canceled by it, and no Rights Certificates shall be issued in lieu
thereof except as expressly permitted by any of the provisions of this
Agreement. The Company shall deliver to the Rights Agent for cancellation and
retirement, and the Rights Agent shall so cancel and retire, any other Rights
Certificate purchased or acquired by the Company otherwise than upon the
exercise thereof. The Rights Agent shall deliver all canceled Rights
Certificates to the Company, or shall, at the written request of the Company,
destroy such canceled Rights Certificates, and in such case shall deliver a
certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Capital Stock;
Registration of Securities.
(a) The Company covenants and agrees that it will
cause to be reserved and kept available for issuance upon the exercise of
outstanding Rights as many of its authorized and unissued Preferred Shares
(and, following the occurrence of a Triggering Event, out of its authorized
and unissued or treasury Common Shares and/or other securities) or out of its
authorized and issued shares held in its treasury, which together, shall at
all times after the Distribution Date be sufficient to permit the exercise in
full of all outstanding Rights.
(b) So long as the Preferred Shares (and, following
the occurrence of a Triggering Event, Common Shares or other securities)
issuable and deliverable upon the exercise of the Rights may be listed on any
stock exchange, or quoted on the Nasdaq Stock Market, the Company shall use
its best efforts to cause, from and after such time as the Rights become
exercisable, all shares and other securities reserved for such issuance to be
listed on such exchange upon official notice of issuance upon such exercise.
(c) The Company shall use its best efforts to (i)
file, as soon as practicable following the earliest date after the first
occurrence of a Section 11(a)(ii) Event on which the consideration to be
delivered by the Company upon exercise of the Rights has been determined in
accordance with Section 11(a)(iii) hereof, or as soon as is required by law
following the Distribution Date, as the case may be, a registration statement
or statements under the Securities Act of 1933, as amended (the "Act"), with
respect to the securities purchasable upon exercise of the Rights on an
appropriate form or forms, (ii) cause such registration statement or
statements to
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become effective as soon as practicable after such filing, and (iii) cause
such registration statement or statements to remain effective (with a
prospectus at all times meeting the requirements of the Act) until the earlier
of (A) the date as of which the Rights are no longer exercisable for such
securities, and (B) the Expiration Date. The Company will also take such
action as may be appropriate under, or to ensure compliance with, the
securities or "blue sky" laws of the various states in connection with the
exercisability of the Rights. The Company may temporarily suspend, for a
period of time not to exceed ninety (90) days after the date set forth in
clause (i) of the first sentence of this subsection (c), the exercisability of
the Rights in order to prepare and file such registration statement and permit
it to become effective. Upon any such suspension, the Company shall issue a
public announcement stating that the exercisability of the Rights has been
temporarily suspended, as well as a public announcement at such time as the
suspension is no longer in effect. In addition, if the Company shall determine
that a registration statement is required following the Distribution Date, the
Company may, by issuing a public announcement, temporarily suspend the
exercisability of the Rights until such time as a registration statement has
been declared effective. The Company shall notify the Rights Agent whenever it
makes a public announcement pursuant to this subsection (c) and give the
Rights Agent a copy of the announcement. Notwithstanding any provision of this
Agreement to the contrary, the Rights shall not be exercisable in any
jurisdiction unless the requisite qualification in such jurisdiction shall
have been obtained, nor shall the Rights be exercisable if the exercise
thereof shall not be permitted under applicable law or a registration
statement shall not have been declared effective.
(d) The Company covenants and agrees that it will
take all such action as may be necessary to ensure that all Preferred Shares
(and, following a Triggering Event, Common Shares or other securities)
delivered upon exercise of Rights shall, at the time of delivery of the
certificates for such shares or other securities (subject to payment of the
Purchase Price), be duly and validly authorized and issued and, with respect
to Preferred Shares, Common Shares or other shares of capital stock, fully
paid and nonassessable.
(e) The Company further covenants and agrees that
it will pay when due and payable any and all taxes and governmental charges
that may be payable in respect of the issuance or delivery of the Rights
Certificates and of any certificates for a number of Preferred Share Fractions
(or Common Shares or other securities, as the case may be) upon the exercise
of Rights. The Company shall not, however, be required to pay any transfer tax
that may be payable in respect of any transfer or delivery of Rights
Certificates to a Person other than, or the issuance or delivery of a number
of Preferred Share Fractions (or Common Shares or other securities, as the
case may be) in respect of a name other than that of the registered holder of
the Rights Certificates evidencing Rights surrendered for exercise or to issue
or deliver any certificates for a number of Preferred Share Fractions (or
Common Shares or other securities, as
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the case may be) in a name other than that of the registered holder upon the
exercise of any Rights until such tax shall have been paid (any such tax being
payable by the holder of such Rights Certificate at the time of surrender) or
until it has been established to the Company's satisfaction that no such tax
is due.
Section 10. Capital Stock Record Date. Each Person in whose
name any certificate for a number of Preferred Share Fractions (or Common
Shares or other securities, as the case may be) is issued upon the exercise of
Rights shall for all purposes be deemed to have become the holder of record of
such Preferred Share Fractions (or Common Shares or other securities, as the
case may be) represented thereby on, and such certificate shall be dated, the
date upon which the Rights Certificate evidencing such Rights was duly
surrendered and payment of the Purchase Price (and all applicable taxes and
governmental charges) was made; provided, however, that if the date of such
surrender and payment is a date upon which the applicable transfer books of
the Company are closed, such Person shall be deemed to have become the record
holder of such shares (fractional or otherwise) on, and such certificate shall
be dated, the next succeeding Business Day on which the applicable transfer
books of the Company are open. Prior to the exercise of the Rights evidenced
thereby, the holder of a Rights Certificate shall not be entitled to any
rights of a shareholder of the Company with respect to shares for which the
Rights shall be exercisable, including, without limitation, the right to vote,
to receive dividends or other distributions or to exercise any preemptive
rights, and shall not be entitled to receive any notice of any proceedings of
the Company, except as provided herein.
Section 11. Adjustment of Purchase Price, Number and Kind of
Shares or Number of Rights. The Purchase Price, the number and kind of shares
and other securities covered by each Right and the number of Rights
outstanding are subject to adjustment from time to time as provided in this
Section 11.
(a) (i) In the event the Company shall at any time
after the date of this Agreement (A) declare a dividend on any
security of the Company payable in Preferred Shares, (B) subdivide
the outstanding Preferred Shares, (C) combine the outstanding
Preferred Shares into a smaller number of shares, or (D) issue any
shares of its capital stock in a reclassification of the Preferred
Shares (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or
surviving corporation), except as otherwise provided in this Section
11(a) and Section 7(e) hereof, the Purchase Price in effect at the
time of the record date for such dividend or of the effective date of
such subdivision, combination or reclassification, and the number and
kind of Preferred Shares or capital stock, as the case may be,
issuable on such date, shall be proportionately adjusted so that the
holder of any Right exercised after such time shall be entitled to
receive, upon payment of the adjusted Purchase Price, the aggregate
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number and kind of Preferred Shares or capital stock, as the case may
be, that, if such Right had been exercised immediately prior to such
date and at a time when the Preferred Share transfer books were open,
such holder would have owned upon such exercise and been entitled to
receive by virtue of such dividend, subdivision, combination or
reclassification. If an event occurs which would require an
adjustment under both this Section 11(a)(i) and Section 11(a)(ii)
hereof, the adjustment provided for in this Section 11(a)(i) shall be
in addition to, and shall be made prior to, any adjustment required
pursuant to Section 11(a)(ii) hereof.
(ii) In the event:
(A) any Acquiring Person or any Associate
or Affiliate of any Acquiring Person, at any time after the
Stock Acquisition Date, directly or indirectly, (1) shall
merge into the Company or otherwise combine with the Company
and the Company shall be the continuing or surviving
corporation of such merger or combination and the Common
Shares of the Company or other equity securities of the
Company shall remain outstanding, (2) shall, in one
transaction or a series of transactions, transfer any assets
to the Company or to any of its Subsidiaries in exchange (in
whole or in part) for Common Shares, for shares of other
equity securities of the Company, or for securities
exercisable for or convertible into shares of equity
securities of the Company (Common Shares or otherwise) or
otherwise obtain from the Company, with or without
consideration, any additional shares of such equity
securities or securities exercisable for or convertible into
shares of such equity securities (other than pursuant to a
pro rata distribution to all holders of Common Shares), (3)
shall sell, purchase, lease, exchange, mortgage, pledge,
transfer or otherwise acquire or dispose of assets in one
transaction or a series of transactions, to, from or with
(as the case may be) the Company or any of its Subsidiaries,
on terms and conditions less favorable to the Company than
the Company would be able to obtain in arm's-length
negotiation with an unaffiliated third party, other than
pursuant to a Section 13 Event, (4) shall sell, purchase,
lease, exchange, mortgage, pledge, transfer or otherwise
dispose of assets having an aggregate fair market value of
more than $5,000,000 in one transaction or a series of
transactions, to, from or with (as the case may be) the
Company or any of the Company's Subsidiaries (other than
incidental to the lines of business, if any, engaged in as
of the date hereof between the Company and such Acquiring
Person or Associate or Affiliate), other than pursuant to a
Section 13 Event, (5) shall receive any compensation from
the Company or any of the Company's Subsidiaries other than
compensation for full-time employment as a regular employee
at rates in accordance with the
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Company's (or its Subsidiaries') past practices, or (6)
shall receive the benefit, directly or indirectly (except
proportionately as a shareholder and except if resulting
from a requirement of law or governmental regulation), of
any loans, advances, guarantees, pledges or other financial
assistance or any tax credits or other tax advantages
provided by the Company or any of its Subsidiaries; or
(B) any Person (other than the Company,
any Subsidiary of the Company, any employee benefit plan of
the Company or of any Subsidiary of the Company, or any
Person or entity organized, appointed or established by the
Company for or pursuant to the terms of any such plan),
alone or together with its Affiliates and Associates, shall,
at any time after the Rights Dividend Declaration Date,
become the Beneficial Owner of 20% or more of the Common
Shares then outstanding, unless the event causing the 20%
threshold to be crossed is a Section 13 Event, or is an
acquisition of Common Shares pursuant to a tender offer or
an exchange offer for all outstanding Common Shares at a
price and on terms determined by at least a majority of the
Continuing Directors, after receiving advice from one or
more nationally recognized investment banking firms, to be
in the best interests of the Company and its shareholders (a
"Qualifying Offer"), after taking into consideration all
factors that such members of the Board of Directors deem
relevant, including, without limitation, the long-term
prospects and value of the Company and the prices and terms
that such members of the Board of Directors believe, in good
faith, could reasonably be achieved if the Company or its
assets were sold on an orderly basis designed to realize
maximum value, or
(C) during such time as there is an
Acquiring Person, there shall be any reclassification of
securities (including any reverse stock split), or
recapitalization of the Company, or any merger or
consolidation of the Company with any of its Subsidiaries or
any other transaction or series of transactions involving
the Company or any of its Subsidiaries, other than a Section
13 Event or series of such Section 13 Events (whether or not
with or into or otherwise involving an Acquiring Person)
that has the effect, directly or indirectly, of increasing
by more than 1% the proportionate share of the outstanding
shares of any class of equity securities of the Company or
any of its Subsidiaries that is directly or indirectly
beneficially owned by any Acquiring Person or any Associate
or Affiliate of any Acquiring Person,
then, promptly following the first occurrence of a Section 11(a)(ii)
Event, proper provision shall be made so that each holder of a Right
(except as provided below and in
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Section 7(e) hereof) shall thereafter have the right to receive, upon
exercise thereof at the then current Purchase Price in accordance
with the terms of this Agreement, in lieu of a number of Preferred
Share Fractions, such number of Common Shares of the Company as shall
equal the result obtained by (x) multiplying the then current
Purchase Price by the then number of Preferred Share Fractions for
which a Right was exercisable immediately prior to the first
occurrence of a Section 11(a)(ii) Event, and (y) dividing that
product (which, following such first occurrence, shall thereafter be
referred to as the "Purchase Price" for each Right and for all
purposes of this Agreement) by 50% of the current market price (as
defined in and determined pursuant to Section 11(d) hereof) per
Common Share on the date of such first occurrence (such number of
shares, the "Adjustment Shares").
(iii) In the event that the number of Common Shares
that are authorized by the Company's Articles of Incorporation but
not outstanding or reserved for issuance for purposes other than upon
exercise of the Rights are not sufficient to permit the exercise in
full of the Rights in accordance with the foregoing subparagraph (ii)
of this Section 11(a), the Company shall: (A) determine the excess of
the value of the Adjustment Shares issuable upon the exercise of a
Right (the "Current Value") over the Purchase Price (such excess, the
"Spread"), and (B) with respect to each Right, make adequate
provision to substitute for the Adjustment Shares, upon payment of
the applicable Purchase Price, (1) cash, (2) a reduction in the
Purchase Price, (3) Common Shares of the same or a different class or
other equity securities of the Company (including, without
limitation, preferred shares or units of preferred shares that a
majority of the Continuing Directors in office at the time has deemed
(based, among other things, on the dividend and liquidation rights of
such preferred shares) to have substantially the same economic value
as Common Shares (such preferred shares, hereinafter referred to as
"common share equivalents")), (4) debt securities of the Company, (5)
other assets, or (6) any combination of the foregoing, having an
aggregate value equal to the Current Value, where such aggregate
value has been determined by a majority of the Continuing Directors
in office at the time after considering the advice of a nationally
recognized investment banking firm selected by the Board of Directors
of the Company; provided, however, if the Company shall not have made
adequate provision to deliver value pursuant to clause (B) above
within thirty (30) days following the later of (x) the first
occurrence of a Section 11(a)(ii) Event and (y) the date on which the
Company's right of redemption pursuant to Section 23(a) expires (the
later of (x) and (y) being referred to herein as the "Section
11(a)(ii) Trigger Date"), then the Company shall be obligated to
deliver, upon the surrender for exercise of a Right and without
requiring payment of the Purchase Price, Common Shares (to the extent
available) and then, if necessary, cash, which shares and/or cash
have an aggregate value equal to the Spread. If the Board of
Directors of the Company shall determine in good
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faith that it is likely that sufficient additional Common Shares
could be authorized for issuance upon exercise in full of the Rights,
the thirty (30) day period set forth above may be extended to the
extent necessary, but not more than ninety (90) days after the
Section 11(a)(ii) Trigger Date, in order that the Company may seek
shareholder approval for the authorization of such additional shares
(such period, as it may be extended, the "Substitution Period"). To
the extent that the Company determines that some action need be taken
pursuant to the first and/or second sentences of this Section
11(a)(iii), the Company shall provide, subject to Section 7(e)
hereof, that such action shall apply uniformly to all outstanding
Rights, and may suspend the exercisability of the Rights until the
expiration of the Substitution Period in order to seek any
authorization of additional shares and/or to decide the appropriate
form of distribution to be made pursuant to such first sentence and
to determine the value thereof. The Company shall make a public
announcement when the exercisability of the Rights has been
temporarily suspended, and again when such suspension is no longer in
effect. The Company shall notify the Rights Agent of the suspension
of the exercisability of the Rights, and provide the Rights Agent
with a copy of such public announcement. For purposes of this Section
11(a)(iii), the value of the Common Shares shall be the current
market price (as determined pursuant to Section 11(d) hereof) per
Common Share on the Section 11(a)(ii) Trigger Date and the value of
any "common share equivalent" shall be deemed to have the same value
as the Common Shares on such date.
(b) In case the Company shall fix a record date for
the issuance of rights, options or warrants to holders of any security of the
Company entitling them to subscribe for or purchase (for a period expiring
within forty-five (45) calendar days after such record date) Preferred Shares
(or shares having the same rights, privileges and preferences as the Preferred
Shares ("equivalent preferred shares")) or securities convertible into
Preferred Shares or equivalent preferred shares at a price per Preferred Share
or per equivalent preferred share (or having a conversion price per share, if
a security convertible into Preferred Shares or equivalent preferred shares)
less than the current market price (as determined pursuant to Section 11(d)
hereof) per Preferred Share on such record date, the Purchase Price to be in
effect after such record date shall be determined by multiplying the Purchase
Price in effect immediately prior to such record date by a fraction, the
numerator of which shall be the number of Preferred Shares outstanding on such
record date, plus the number of Preferred Shares that the aggregate offering
price of the total number of Preferred Shares and/or equivalent preferred
shares so to be offered (and/or the aggregate initial conversion price of the
convertible securities so to be offered) would purchase at such current market
price, and the denominator of which shall be the number of Preferred Shares
outstanding on such record date, plus the number of additional Preferred
Shares and/or equivalent preferred shares to be offered for subscription or
purchase (or into which the convertible securities so to be offered are
initially convertible). In case such subscription price
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may be paid by delivery of consideration part or all of which may be in a form
other than cash, the value of such consideration shall be as determined in
good faith by the Board of Directors of the Company, whose determination shall
be described in a statement filed with the Rights Agent and shall be binding
on the Company, the Rights Agent and the holders of the Rights. Preferred
Shares owned by or held for the account of the Company shall not be deemed
outstanding for the purpose of any such computation. Such adjustment shall be
made successively whenever such a record date is fixed, and in the event that
such rights or warrants are not so issued, the Purchase Price shall be
adjusted to be the Purchase Price that would then be in effect if such record
date had not been fixed.
(c) In case the Company shall fix a record date for
a distribution to all holders of Preferred Shares (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing corporation) of evidences of indebtedness, cash
(other than a regular quarterly dividend out of the earnings or retained
earnings of the Company), assets (other than a regular quarterly dividend
referred to above or dividend payable in Preferred Shares, but including any
dividend payable in stock other than Preferred Shares) or subscription rights
or warrants (excluding those referred to in Section 11(b) hereof), the
Purchase Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such record date
by a fraction, the numerator of which shall be the current market price (as
determined pursuant to Section 11(d) hereof) per Preferred Share on such
record date, less the then fair market value (as determined in good faith by
the Board of Directors of the Company, whose determination shall be described
in a statement filed with the Rights Agent and shall be conclusive for all
purposes) of the portion of the cash, assets or evidences of indebtedness so
to be distributed or of such subscription rights or warrants applicable to a
Preferred Share and the denominator of which shall be such current market
price (as determined pursuant to Section 11(d) hereof) per Preferred Share.
Such adjustments shall be made successively whenever such a record date is
fixed, and in the event that such distribution is not so made, the Purchase
Price shall be adjusted to be the Purchase Price which would have been in
effect if such record date had not been fixed.
(d) (i) For the purpose of any computation
hereunder, other than computations made pursuant to Section
11(a)(iii) hereof, the "current market price" per Common Share on any
date shall be deemed to be the average of the daily closing prices
per Common Share for the thirty (30) consecutive Trading Days (as
such term is hereinafter defined) immediately prior to and not
including such date, and for purposes of computations made pursuant
to Section 11(a)(iii) hereof, the "current market price" per Common
Share on any date shall be deemed to be the average of the daily
closing prices per Common Share for the ten (10) consecutive Trading
Days immediately following and not including such date; provided,
however, that in the event that the current market price
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per Common Share is determined during a period following the
announcement by the issuer of such Common Share of (A) a dividend or
distribution on such Common Share payable in Common Shares or
securities convertible into Common Shares (other than the Rights), or
(B) any subdivision, combination or reclassification of such Common
Shares, and prior to the expiration of the requisite thirty (30)
Trading Day or ten (10) Trading Day period, as set forth above, after
the ex-dividend date for such dividend or distribution, or the record
date for such subdivision, combination or reclassification, then, and
in each such case, the "current market price" shall be properly
adjusted to take into account ex-dividend trading. The closing price
for each Trading Day shall be the last sale price, regular way, or,
in case no such sale takes place on such day, the average of the
closing bid and asked prices, regular way, in either case as reported
in the principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the New York
Stock Exchange or, if the Common Shares are not listed or admitted to
trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the
Common Shares are listed or admitted to trading or, if the Common
Shares are not listed or admitted to trading on any national
securities exchange, the last quoted price or, if not so quoted, the
average of the high bid and low asked prices in the over-the-counter
market, as reported by the National Association of Securities
Dealers, Inc. Automated Quotation System ("Nasdaq") or such other
system then in use, or, if on any such date the Common Shares are not
quoted by any such organization, the average of the closing bid and
asked prices as furnished by a professional market maker making a
market in the Common Shares selected by the Board of Directors of the
Company. If on any such date no market maker is making a market in
the Common Shares, the fair value of such shares on such date as
determined in good faith by the Board of Directors of the Company
shall be used. The term "Trading Day" shall mean a day on which the
principal national securities exchange on which the Common Shares are
listed or admitted to trading is open for the transaction of business
or, if the Common Shares are not listed or admitted to trading on any
national securities exchange, a Business Day. If the Common Shares
are not publicly held or not so listed or traded, "current market
price" per share shall mean the fair value per share as determined in
good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights
Agent and shall be conclusive for all purposes.
(ii) For the purpose of any computation hereunder,
the "current market price" per Preferred Share shall be determined in
the same manner as set forth above for the Common Shares in clause
(i) of this Section 11(d) (other than the last sentence thereof). If
the current market price per Preferred Share cannot be determined in
the
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manner provided above or if the Preferred Shares are not publicly
held or listed or traded in a manner described in clause (i) of this
Section 11(d), the "current market price" per Preferred Share shall
be conclusively deemed to be an amount equal to one hundred (as such
number may be appropriately adjusted for such events as stock splits,
stock dividends and recapitalizations with respect to the Common
Shares occurring after the date of this Agreement) multiplied by the
current market price per Common Share. If neither the Common Shares
nor the Preferred Shares are publicly held or so listed or traded,
"current market price" per Preferred Share shall mean the fair value
per share as determined in good faith by the Board of Directors of
the Company, whose determination shall be described in a statement
filed with the Rights Agent and shall be conclusive for all purposes.
For all purposes of this Agreement, the "current market price" of a
Preferred Share Fraction shall be equal to the "current market price"
of one Preferred Share divided by 1000.
(e) Anything herein to the contrary
notwithstanding, no adjustment in the Purchase Price shall be required unless
such adjustment would require an increase or decrease of at least one percent
(1%) in the Purchase Price; provided, however, that any adjustments which by
reason of this Section 11(e) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All calculations
under this Section 11 shall be made to the nearest cent or to the nearest
ten-thousandth of a Common Share or one millionth of a Preferred Share, as the
case may be. Notwithstanding the first sentence of this subsection (e), any
adjustment required by this Section 11 shall be made no later than the earlier
of (i) three (3) years from the date of the transaction that mandates such
adjustment, or (ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant
to Section 11(a)(ii) or Section 13(a) hereof, the holder of any Right
thereafter exercised shall become entitled to receive any shares of capital
stock other than Preferred Shares, thereafter the number of such other shares
so receivable upon exercise of any Right and the Purchase Price thereof shall
be subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the Preferred
Shares contained in Sections 11(a), (b), (c), (e), (g), (h), (i), (j), (k),
(m) and (q), and the provisions of Sections 7, 9, 10, 13 and 14 hereof with
respect to the Preferred Shares shall apply on like terms to any such other
shares.
(g) All Rights originally issued by the Company
subsequent to any adjustment made to the Purchase Price hereunder shall
evidence the right to purchase, at the adjusted Purchase Price, the number of
Preferred Share Fractions purchasable from time to time hereunder upon
exercise of the Rights, all subject to further adjustment as provided herein.
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(h) Unless the Company shall have exercised its
election as provided in Section 11(i), upon each adjustment of the Purchase
Price as a result of the calculations made in subsections (b) and (c), each
Right outstanding immediately prior to the making of such adjustment shall
thereafter evidence the right to purchase, at the adjusted Purchase Price,
that number of Preferred Share Fractions (calculated to the nearest one-one
millionth of a Preferred Share) obtained by (i) multiplying (x) the number of
Preferred Share Fractions covered by a Right immediately prior to this
adjustment, by (y) the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price, and (ii) dividing the product so obtained by
the Purchase Price in effect immediately after such adjustment of the Purchase
Price.
(i) The Company may elect on or after the date of
any adjustment of the Purchase Price to adjust the number of Rights, in lieu
of any adjustment in the number of Preferred Share Fractions purchasable upon
the exercise of a Right. Each of the Rights outstanding after the adjustment
in the number of Rights shall be exercisable for the number of Preferred Share
Fractions for which a Right was exercisable immediately prior to such
adjustment. Each Right held of record prior to such adjustment of the number
of Rights shall become that number of Rights (calculated to the nearest
one-one millionth of a Preferred Share) obtained by dividing the Purchase
Price in effect immediately prior to adjustment of the Purchase Price by the
Purchase Price in effect immediately after adjustment of the Purchase Price.
The Company shall make a public announcement of its election to adjust the
number of Rights, indicating the record date for the adjustment, and, if known
at the time, the amount of the adjustment to be made. The Company shall
forward a copy of such public announcement to the Rights Agent. The record
date for the adjustment may be the date on which the Purchase Price is
adjusted or any day thereafter, but, if the Rights Certificates have been
issued, shall be at least ten (10) days later than the date of the public
announcement. If Rights Certificates have been issued, upon each adjustment of
the number of Rights pursuant to this Section 11(i), the Company shall, as
promptly as practicable, cause to be distributed to holders of record of
Rights Certificates on such record date Rights Certificates evidencing,
subject to Section 14 hereof, the additional Rights to which such holders
shall be entitled as a result of such adjustment, or, at the option of the
Company, shall cause to be distributed to such holders of record in
substitution and replacement for the Rights Certificates held by such holders
prior to the date of adjustment, and upon surrender thereof, if required by
the Company, new Rights Certificates evidencing all the Rights to which such
holders shall be entitled after such adjustment. Rights Certificates so to be
distributed shall be issued, executed and countersigned in the manner provided
for herein (and may bear, at the option of the Company, the adjusted Purchase
Price) and shall be registered in the names of the holders of record of Rights
Certificates on the record date specified in the public announcement.
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<PAGE>
(j) Irrespective of any adjustment or change in the
Purchase Price or the number of Preferred Share Fractions issuable upon the
exercise of the Rights, the Rights Certificates theretofore and thereafter
issued may continue to express the Purchase Price per Preferred Share Fraction
and the number of Preferred Share Fractions that were expressed in the initial
Rights Certificates issued hereunder.
(k) Before taking any action that would cause an
adjustment reducing the Purchase Price below the then stated or par value, if
any, of the number of Preferred Share Fractions issuable upon exercise of the
Rights, the Company shall take any corporate action that may, in the opinion
of its counsel, be necessary in order that the Company may validly and legally
issue such number of fully paid and nonassessable Preferred Share Fractions at
such adjusted Purchase Price.
(l) In any case in which this Section 11 shall
require that an adjustment in the Purchase Price be made effective as of a
record date for a specified event, the Company may elect to defer until the
occurrence of such event the issuance to the holder of any Right exercised
after such record date the number of Preferred Share Fractions and other
capital stock or securities of the Company, if any, issuable upon such
exercise over and above the number of Preferred Share Fractions and other
capital stock or securities of the Company, if any, issuable upon such
exercise on the basis of the Purchase Price in effect prior to such
adjustment; provided, however, that the Company shall deliver to such holder a
due bill or other appropriate instrument evidencing such holder's right to
receive such additional shares (fractional or otherwise) or securities upon
the occurrence of the event requiring such adjustment, and the Company shall
also deliver a copy of such bill or instrument to the Rights Agent.
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such reductions in the
Purchase Price, in addition to those adjustments expressly required by this
Section 11, as and to the extent that in their good faith judgment the Board
of Directors of the Company shall determine to be advisable in order that any
(i) consolidation or subdivision of the Preferred Shares, (ii) issuance wholly
for cash of any Preferred Shares at less than the current market price, (iii)
issuance wholly for cash for Preferred Shares or securities which by their
terms are convertible into or exchangeable for Preferred Shares, (iv) stock
dividends or (v) issuance of rights, options or warrants referred to in this
Section 11, hereafter made by the Company to holders of its Preferred Shares
shall not be taxable to such shareholders.
(n) The Company covenants and agrees that it shall
not, at any time after the Distribution Date, (i) consolidate with any other
Person (other than a Subsidiary of the Company in a transaction which complies
with Section 11(o) hereof), (ii) merge with or into any
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other Person (other than a Subsidiary of the Company in a transaction which
complies with Section 11(o) hereof), or (iii) sell or transfer (or permit any
Subsidiary to sell or transfer), in one transaction, or a series of related
transactions, assets or earning power aggregating more than 50% of the assets
or earning power of the Company and its Subsidiaries (taken as a whole) to any
other person or persons (other than the Company and/or any of its Subsidiaries
in one or more transactions each of which complies with Section 11(o) hereof),
if (x) at the time of or immediately after such consolidation, merger or sale
there are any rights, warrants or other instruments or securities outstanding
or agreements in effect that would substantially diminish or otherwise
eliminate the benefits intended to be afforded by the Rights or (y) prior to,
simultaneously with or immediately after such consolidation, merger or sale,
the shareholders of the Person who constitutes, or would constitute, the
"Principal Party" for purposes of Section 13(a) hereof shall have received a
distribution of Rights previously owned by such Person or any of its
Affiliates and Associates.
(o) The Company covenants and agrees that, after
the Distribution Date, it will not, except as permitted by Section 23 or
Section 26 hereof, take (or permit any Subsidiary to take) any action if at
the time such action is taken it is reasonably foreseeable that such action
will diminish substantially or otherwise eliminate the benefits intended to be
afforded by the Rights.
(p) Anything in this Agreement to the contrary
notwithstanding, in the event that the Company shall at any time after the
Rights Dividend Declaration Date and prior to the Distribution Date (i)
declare a dividend on the outstanding Common Shares payable in Common Shares,
(ii) subdivide the outstanding Common Shares, or (iii) combine the outstanding
Common Shares into a smaller number of shares, the number of Rights associated
with each Common Share then outstanding, or issued or delivered thereafter but
prior to the Distribution Date, shall be proportionately adjusted so that the
number of Rights thereafter associated with each Common Share following any
such event shall equal the result obtained by multiplying the number of Rights
associated with each Common Share immediately prior to such event by a
fraction the numerator of which shall be the total number of Common Shares
outstanding immediately prior to the occurrence of the event and the
denominator of which shall be the total number of Common Shares outstanding
immediately following the occurrence of such event.
(q) In the event that the Rights become exercisable
following a Section 11(a)(ii) Event, the Company, by action of a majority of
the Continuing Directors in office at the time, may authorize that the Rights,
subject to Section 7(e) hereof, either (i) will only be, or (ii) may, at the
option of the holder entitled to exercise the Rights be, exercisable for, in
either case 50% of the Common Shares (or cash or other securities or assets to
be substituted for the Adjustment Shares pursuant to subsection (a)(iii)) that
would otherwise be purchasable under
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subsection (a), in consideration of the surrender to the Company of the Rights
so exercised and without other payment of the Purchase Price. Rights exercised
under this subsection (q) shall be deemed to have been exercised in full and
shall be canceled.
Section 12. Certificate of Adjusted Purchase Price or Number
of Shares. Whenever an adjustment is made as provided in Section 11 or Section
13 hereof, the Company shall (a) promptly prepare a certificate setting forth
such adjustment and a brief, reasonably detailed statement of the facts and
computations accounting for such adjustment, (b) promptly file with the Rights
Agent, and with each transfer agent for the Preferred Shares and the Common
Shares, a copy of such certificate, and (c) mail a brief summary thereof to
each holder of a Rights Certificate (or, if prior to the Distribution Date, to
each holder of a certificate representing Common Shares) in accordance with
Section 25 hereof. The Rights Agent shall be fully protected in relying on any
such certificate and on any adjustment therein contained and shall have no
duty with respect to and shall not be deemed to have knowledge of any such
adjustment unless and until it shall have received such a certificate.
Section 13. Consolidation, Merger or Sale or Transfer of
Assets or Earning Power.
(a) In the event that, following the Stock
Acquisition Date, directly or indirectly, (x) the Company shall consolidate
with, or merge with and into, any other Person (other than a Subsidiary of the
Company in a transaction which complies with Section 11(o) hereof), and the
Company shall not be the continuing or surviving corporation of such
consolidation or merger, (y) any person (other than a Subsidiary of the
Company in a transaction which complies with Section 11(o) hereof) shall
consolidate with, or merge with or into, the Company, and the Company shall be
the continuing or surviving corporation of such consolidation or merger and,
in connection with such consolidation or merger, all or part of the
outstanding Common Shares shall be changed into or exchanged for stock or
other securities of any other Person or cash or any other property, or (z) the
Company shall sell or otherwise transfer (or one or more of its Subsidiaries
shall sell or otherwise transfer), in one transaction or a series of related
transactions, assets or earning power aggregating more than 50% of the assets,
operating income, cash flow or earning power of the Company and its
Subsidiaries (taken as a whole) to any Person or Persons (other than the
Company or any Subsidiary of the Company in one or more transactions each of
which complies with Section 11(o) hereof), then, and in each such case and
except as contemplated by subsection (d), proper provision shall be made so
that:
(i) each holder of a Right, except as provided in
Section 7(e) hereof or subsection (e), shall thereafter have the
right to receive, upon the exercise thereof at the then current
Purchase Price in accordance with the terms of this Agreement, such
number of validly authorized and issued, fully paid, non assessable
and freely tradeable Common
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Shares of the Principal Party (as such term is hereinafter defined),
not subject to any liens, encumbrances, rights of first refusal or
other adverse claims, as shall be equal to the result obtained by (1)
multiplying the then current Purchase Price by the number of
Preferred Share Fractions for which a Right is exercisable
immediately prior to the first occurrence of a Section 13 Event (or,
if a Section 11(a)(ii) Event has occurred prior to the first
occurrence of a Section 13 Event, multiplying the number of such
shares for which a Right was exercisable immediately prior to the
first occurrence of a Section 11(a)(ii) Event by the Purchase Price
in effect immediately prior to such first occurrence), and (2)
dividing that product (which, following the first occurrence of a
Section 13 Event, shall be referred to as the "Purchase Price" for
each Right and for all purposes of this Agreement) by 50% of the
current market price (determined pursuant to Section 11(d)(i) hereof)
per Common Share of such Principal Party on the date of consummation
of such Section 13 Event;
(ii) such Principal Party shall thereafter be
liable for, and shall assume, by virtue of such Section 13 Event, all
the obligations and duties of the Company pursuant to this Agreement;
(iii) the term "Company" shall thereafter be deemed
to refer to such Principal Party, it being specifically intended that
the provisions of Section 11 hereof shall apply only to such
Principal Party following the first occurrence of a Section 13 Event;
(iv) such Principal Party shall take such steps
(including, but not limited to, the reservation of a sufficient
number of its Common Shares) in connection with the consummation of
any such transaction as may be necessary to assure that the
provisions hereof shall thereafter be applicable, as nearly as
reasonably may be, in relation to its Common Shares thereafter
deliverable upon the exercise of the Rights; and
(v) the provisions of Section 11(a)(ii) hereof
shall be of no effect following the first occurrence of any Section
13 Event.
(b) "Principal Party" shall mean
(i) in the case of any transaction described in
clause (x) or (y) of the first sentence of subsection (a), the Person
that is the issuer of any securities into which Common Shares of the
Company are converted in such merger or consolidation, and if no
securities are so issued, the Person that is the other party to such
merger or consolidation; and
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(ii) in the case of any transaction described in
clause (z) of the first sentence of subsection (a), the Person that
is the party receiving the greatest portion of the assets or earning
power transferred pursuant to such transaction or transactions;
provided, however, that in the case of either (i) or (ii) above, (1) if the
Common Shares of such Person are not at such time and have not been
continuously over the preceding twelve (12) month period registered under
Section 12 of the Exchange Act, and such Person is a direct or indirect
Subsidiary of another Person the Common Shares of which are and have been so
registered, "Principal Party" shall refer to such other Person, and (2) in
case such Person is a Subsidiary, directly or indirectly, of more than one
Person, the Common Shares of two or more of which are and have been so
registered, "Principal Party" shall refer to whichever of such Persons is the
issuer of the Common Shares having the greatest aggregate market value.
(c) The Company shall not consummate any such
consolidation, merger, sale or transfer unless the Principal Party shall have
a sufficient number of authorized shares of its Common Shares that have not
been issued or reserved for issuance to permit the exercise in full of the
Rights in accordance with this Section 13 and unless prior thereto the Company
and such Principal Party shall have executed and delivered to the Rights Agent
a supplemental agreement providing for the terms set forth in paragraphs (a)
and (b) of this Section 13 and further providing that, as soon as practicable
after the date of any Section 13 event, the Principal Party will
(i) prepare and file a registration statement under
the Act, with respect to the Rights and the securities purchasable
upon exercise of the Rights on an appropriate form, and will use its
best efforts to cause such registration statement to (A) become
effective as soon as practicable after such filing and (B) remain
effective (with a prospectus at all times meeting the requirements of
the Act) until the Expiration Date;
(ii) use its best efforts to qualify or register
the Rights and the securities purchasable upon exercise of the Rights
under blue sky laws of such jurisdiction, as may be necessary or
appropriate; and
(iii) deliver to holders of the Rights historical
financial statements for the Principal Party and each of its
Affiliates that comply in all respects with the requirements for
registration on Form 10 under the Exchange Act.
The provisions of this Section 13 shall similarly apply to successive mergers
or consolidations or sales or other transfers. In the event that a Section 13
Event shall occur at any time after the
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occurrence of a Section 11(a)(ii) Event, the Rights that have not theretofore
been exercised shall thereafter become exercisable solely in the manner
described in Section 13(a).
(d) Notwithstanding anything in this Agreement to
the contrary, Section 13 (other than this subsection (d)) shall not be
applicable to, and the term "Section 13 Event" shall not include, a
transaction described in subparagraphs (x) and (y) of Section 13(a) if (i)
such transaction is consummated with a Person, or Persons who acquired Common
Shares pursuant to a Qualifying Offer (or a wholly owned Subsidiary of any
such Person or Persons), (ii) the price per Common Share offered in such
transaction is not less than the price per Common Share paid to all holders of
Common Shares whose shares were purchased pursuant to such tender offer or
exchange offer and (iii) the form of consideration being offered to the
remaining holders of Common Shares pursuant to such transaction is the same as
the form of consideration paid pursuant to such tender or exchange offer. Upon
consummation of any such transaction contemplated by this subsection (d), all
Rights hereunder shall expire.
(e) In the event that the Rights become exercisable
under subsection (a) (except as provided in subsection (d)), the Company, by
action of a majority of the Continuing Directors in office at the time, may
authorize that the Rights either (i) will only be or (ii) may, at the option
of the Principal Party be, exercisable for, 50% of the Common Shares of the
Principal Party that would otherwise be purchasable under subsection (a), in
consideration of the surrender to the Principal Party, as the successor to the
Company under subsection (a) (ii), of the Rights so exercised and without
other payment of the Purchase Price. Rights exercised under this subsection
(e) shall be deemed to have been exercised in full and shall be canceled.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue
fractions of Rights, except prior to the Distribution Date as provided in
Section 11(p) hereof, or to distribute Rights Certificates that evidence
fractional Rights. In lieu of such fractional Rights, there shall be paid to
the registered holders of the Rights Certificates with regard to which such
fractional Rights would otherwise be issuable, an amount in cash equal to the
same fraction of the current market value of a whole Right. For purposes of
this subsection (a), the current market value of a whole Right shall be the
closing price of the Rights for the Trading Day immediately prior to the date
on which such fractional Rights would have been otherwise issuable. The
closing price of the Rights for any day shall be the last sale price, regular
way, or, in case no such sale takes place on such day, the average of the
closing bid and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to securities
listed or admitted to trading on the New York Stock Exchange or, if the Rights
are not listed or admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction
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reporting system with respect to securities listed on the principal national
securities exchange on which the Rights are listed or admitted to trading, or
if the Rights are not listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average of the high
bid and low asked prices in the over-the-counter market, as reported by Nasdaq
or such other system then in use or, if on any such date the Rights are not
quoted by any such organization, the average of the closing bid and asked
prices as furnished by a professional market maker making a market in the
Rights selected by the Board of Directors of the Company. If on any such date
no such market maker is making a market in the Rights the fair value of the
Rights on such date as determined in good faith by the Board of Directors of
the Company shall be used.
(b) The Company shall not be required to issue
fractions of Preferred Shares upon exercise of the Rights or to distribute
certificates which evidence fractional Preferred Shares, except in each case
for fractions which are integral multiples of Preferred Shares. In lieu of
fractional Preferred Shares that are not integral multiples of Preferred
Shares, the Company may pay to the registered holders of Rights Certificates
at the time such Rights are exercised as herein provided an amount in cash
equal to the same fraction of the current market value of a Preferred Share.
For purposes of this subsection (b), the current market value of one Preferred
Share shall be the closing price of a Preferred Share (as determined pursuant
to Section 11(d)(ii) hereof) for the Trading Day immediately prior to the date
of such exercise.
(c) Following the occurrence of a Triggering Event,
the Company shall not be required to issue fractions of Common Shares upon
exercise of the Rights or to distribute certificates that evidence fractional
Common Shares. In lieu of fractional Common Shares, the Company may pay to the
registered holders of Rights Certificates at the time such Rights are
exercised as herein provided an amount in cash equal to the same fraction of
the current market value of one Common Share. For purposes of this subsection
(c), the current market value of one Common Share shall be the closing price
of one Common Share (as determined pursuant to Section 11(d)(i) hereof) for
the Trading Day immediately prior to the date of such exercise.
(d) Whenever a payment for fractional Rights or
fractional shares is to be made by the Rights Agent, the Company shall (i)
promptly prepare and deliver to the Rights Agent a certificate setting forth
in reasonable detail the facts related to such payment and the process and/or
formulas utilized in calculating such payments, and (ii) provide sufficient
monies to the Rights Agent in the form of fully collected funds to make such
payments. The Rights Agent shall be fully protected in relying on such
certificate and shall have no duty with respect to and shall not be deemed to
have knowledge of any payment for fractional Rights or fractional shares under
this Section 4 unless and until it shall have received such a certificate and
sufficient monies.
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(e) The holder of a Right or a beneficial interest
in a Right by the acceptance thereof expressly waives his right to receive any
fractional Rights or any fractional Common Shares upon exercise of a Right,
except as permitted by this Section 14.
Section 15. Rights of Action. All rights of action in
respect of this Agreement are vested in the respective registered holders of
the Rights Certificates (and, prior to the Distribution Date, the registered
holders of the Common Shares); and any registered holder of any Rights
Certificate (or, prior to the Distribution Date, of the Common Shares),
without the consent of the Rights Agent or of the holder of any other Rights
Certificate (or, prior to the Distribution Date, of the Common Shares), may,
in his own behalf and for his own benefit, enforce, and may institute and
maintain any suit, action or proceeding against the Company to enforce, or
otherwise act in respect of, his right to exercise the Rights evidenced by
such Rights Certificate in the manner provided in such Rights Certificate and
in this Agreement. Without limiting the foregoing or any remedies available to
the holders of Rights or beneficial interests therein, it is specifically
acknowledged that the holders of Rights or beneficial interests therein would
not have an adequate remedy at law for any breach of this Agreement and shall
be entitled to specific performance of the obligations hereunder and
injunctive relief against actual or threatened violations of the obligations
hereunder of any Person subject to this Agreement.
Section 16. Agreement of Rights Holders. Every holder of a
Right or a beneficial interest in a Right by accepting the same consents and
agrees with the Company and the Rights Agent and with every other such holder
that:
(a) prior to the Distribution Date, beneficial
interests in the Rights will be transferable only in connection with the
transfer of Common Shares;
(b) after the Distribution Date, the Rights
Certificates are transferable only on the registry books of the Rights Agent
if surrendered at the office of the Rights Agent designated for such purposes,
duly endorsed or accompanied by a proper instrument of transfer and with the
appropriate forms and certificates fully executed;
(c) subject to Section 6(a) and Section 7(f)
hereof, the Company and the Rights Agent may deem and treat the Person in
whose name a Rights Certificate (or, prior to the Distribution Date, the
associated Common Share certificate) is registered as the absolute owner
thereof and of the Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Rights Certificates or the associated Common Share
certificate made by anyone other than the Company or the Rights Agent) for all
purposes whatsoever, and neither the Company nor the Rights Agent shall be
required to be affected by any notice to the contrary; and
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(d) notwithstanding anything in this Agreement to
the contrary, neither the Company nor the Rights Agent shall have any
liability to any holder of a Right or a beneficial interest in a Right or
other Person as a result of its inability to perform any of its obligations
under this Agreement by reason of any preliminary or permanent injunction or
other order, decree, judgment or ruling (whether interlocutory or final)
issued by a court of competent jurisdiction or by a governmental, regulatory
or administrative agency or commission, or any statute, rule, regulation or
executive order promulgated or enacted by any governmental authority,
prohibiting or otherwise restraining performance of such obligation; provided,
however, the Company must use its best efforts to have any such order, decree,
judgment or ruling lifted or otherwise overturned as soon as possible.
Section 17. Rights Certificate Holder Not Deemed a
Shareholder. No holder, as such, of any Rights Certificate shall be entitled
to vote, receive dividends or be deemed for any purpose the holder of the
number of Preferred Share Fractions or any other securities of the Company
(including the Common Shares) that may at any time be issuable on the exercise
of the Rights represented thereby, nor shall anything contained herein or in
any Rights Certificate be construed to confer upon the holder of any Rights
Certificate, as such, any of the rights of a shareholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
shareholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
shareholders (except as provided in Section 24 hereof), or to receive
dividends or subscription rights, or otherwise, until the Right or Rights
evidenced by such Rights Certificate shall have been exercised in accordance
with the provisions hereof.
Section 18. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights Agent
reasonable compensation for all services rendered by it hereunder and, from
time to time, on demand of the Rights Agent, its reasonable expenses and
counsel fees and disbursements and other disbursements incurred in the
preparation, execution, delivery, amendment, administration and execution of
this Agreement and the exercise and performance of its duties hereunder. The
Company also agrees to indemnify the Rights Agent and its directors, officers,
employees and agents, for and to hold each of them harmless against, any loss,
liability, damage, judgment, fine, penalty, claim, demand, settlement, cost or
expense, incurred without gross negligence, bad faith or willful misconduct on
the part of the Rights Agent or any such indemnified party, for any action
taken, suffered or omitted by the Rights Agent in connection with the
acceptance or administration of this Agreement or the exercise of its duties
hereunder, including without limitation the costs and expenses of defending
against any claim of liability in the premises.
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(b) The Rights Agent shall be protected and shall
incur no liability for or in respect of any action taken, suffered or omitted
by it in connection with the acceptance and administration of this Agreement
or in the exercise of its duties hereunder in reliance upon any Rights
Certificate or certificate for Common Shares or for other securities of the
Company, instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate, statement, or
other paper or document believed by it to be genuine and to be signed,
executed and, where necessary, verified or acknowledged, by the proper Person
or Persons.
Section 19. Merger or Consolidation or Change of Name of
Rights Agent.
(a) Any Person into which the Rights Agent or any
successor Rights Agent may be merged or with which it may be consolidated, or
any Person resulting from any merger or consolidation to which the Rights
Agent or any successor Rights Agent shall be a party, or any Person succeeding
to the shareholder services or stock transfer business of the Rights Agent or
any successor Rights Agent, shall be the successor to the Rights Agent under
this Agreement without the execution or filing of any paper or any further act
on the part of any of the parties hereto; provided, however, that such Person
would be eligible for appointment as a successor Rights Agent under the
provisions of Section 21 hereof.
(b) In case at any time the name of the Rights
Agent shall be changed and at such time any of the Rights Certificates shall
have been countersigned but not delivered the Rights Agent may adopt the
countersignature under its prior name and deliver Rights Certificates so
countersigned; and in case at that time any of the Rights Certificates shall
not have been countersigned, the Rights Agent may countersign such Rights
Certificates either in its prior name or in its changed name; and in all such
cases such Rights Certificates shall have the full force provided in the
Rights Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent
undertakes the duties and obligations, and only the duties and obligations,
expressly imposed by this Agreement (and no implied duties or obligations)
upon the following terms and conditions, by all of which the Company and the
holders of Rights Certificates or beneficial interests in the Rights, by their
acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel
(who may be legal counsel for the Company), and the advice or written opinion
of such counsel shall be full and complete authorization and protection to the
Rights Agent, and the Rights Agent shall incur no liability for or in respect
of, any action taken, suffered or omitted by it in good faith and in
accordance with such advice or opinion.
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(b) Whenever in the performance of its duties under
this Agreement the Rights Agent shall deem it necessary or desirable that any
fact or matter (including, without limitation, the identity of any Acquiring
Person and the determination of "current market price") be proved or
established by the Company prior to taking, suffering or omitting any action
hereunder, such fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by the Chairman of the Board, the
President, any Vice President, the Treasurer, any Assistant Treasurer, the
Secretary or any Assistant Secretary of the Company and delivered to the
Rights Agent; and such certificate shall be full authorization and protection
to the Rights Agent and the Rights Agent shall incur no liability for or in
respect of any action taken, suffered or omitted in good faith by it under the
provisions of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only
for its own gross negligence, bad faith or willful misconduct; provided,
however that the Rights Agent shall not be liable for special, indirect,
incidental or consequential loss or damage of any kind whatsoever, even if the
Rights Agent has been advised of the likelihood of such loss or damage.
(d) The Rights Agent shall not be liable for or by
reason of any of the statements of fact or recitals contained in this
Agreement or in the Rights Certificates or be required to verify the same
(except as to its countersignature on such Rights Certificates), but all such
statements and recitals are and shall be deemed to have been made by the
Company only.
(e) The Rights Agent shall not be under any
liability or responsibility in respect of the validity of any provision of
this Agreement or the execution and delivery hereof (except the due execution
hereof by the Rights Agent) or in respect of the validity or execution of any
Rights Certificate (except its countersignature thereof); nor shall it be
responsible for any breach by the Company of any covenant or condition
contained in this Agreement or in any Rights Certificate; nor shall it be
responsible for any adjustment required under the provisions of this Agreement
or responsible for the manner, method or amount of any such adjustment or the
ascertaining of the existence of facts that would require any such adjustment
(except with respect to the exercise of Rights evidenced by Rights
Certificates after actual notice of any such adjustment); nor shall it by any
act hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any Common Shares to be issued pursuant to
this Agreement or any Rights Certificate or as to whether any Common Shares or
Preferred Shares will, when so issued, be validly authorized and issued, fully
paid and nonassessable.
(f) The Company agrees that it will perform,
execute, acknowledge and deliver or cause to be performed, executed,
acknowledged and delivered all such further and
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other acts, instruments and assurances as may reasonably be required by the
Rights Agent for the carrying out or performing by the Rights Agent of the
provisions of this Agreement.
(g) The Rights Agent is hereby authorized and
directed to accept instructions with respect to the performance of its duties
hereunder from any one of the Chairman of the Board, the President, any Vice
President, the Secretary, any Assistant Secretary, the Treasurer or any
Assistant Treasurer of the Company, and to apply to such officers for advice
or instructions in connection with its duties, and such instructions shall be
full authorization and protection for the Rights Agent and the Rights Agent
shall incur no liability for or in respect of any action taken, suffered or
omitted to be taken by it in good faith in accordance with instructions of any
such officer. The Rights Agent may conclusively rely on the most recent
instructions provided to it by any such officer.
(h) The Rights Agent and any shareholder,
affiliate, director, officer or employee of the Rights Agent may buy, sell or
deal in any of the Rights or other securities of the Company or become
pecuniarily interested in any transaction in which the Company may be
interested, or contract with or lend money to the Company or otherwise act as
fully and freely as though it were not the Rights Agent under this Agreement
and none of such actions shall constitute a breach of trust. Nothing herein
shall preclude the Rights Agent from acting in any other capacity for the
Company or for any other Person or legal entity.
(i) The Rights Agent may execute and exercise any
of the rights or powers hereby vested in it or perform any duty hereunder
either itself or by or through its attorneys or agents, and the Rights Agent
shall not be answerable or accountable for any act, default, neglect or
misconduct of any such attorneys or agents or for any loss to the Company or
any other Person resulting from any such act, default, neglect or misconduct,
absent gross negligence, bad faith or willful misconduct in the selection and
continued employment thereof.
(j) No provision of this Agreement shall require
the Rights Agent to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties hereunder or in
the exercise of its rights if it believes that repayment of such funds or
adequate indemnification against such risk or liability is not reasonably
assured to it.
(k) If, with respect to any Rights Certificate
surrendered to the Rights Agent for exercise or transfer, the certificate
attached to the form of assignment or form of election to purchase, as the
case may be, has either not been completed or indicates an affirmative
response to clause 1 and/or 2 thereof, the Rights Agent shall not take any
further action with respect to such requested exercise or transfer without
first consulting with the Company.
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Section 21. Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under this
Agreement upon thirty (30) days' prior written notice mailed to the Company
and to each transfer agent of the Common Shares and Preferred Shares by
registered or certified mail, and to the holders of the Rights Certificates by
first- class mail. The Company may remove the Rights Agent or any successor
Rights Agent upon thirty (30) days' prior written notice mailed to the Rights
Agent or successor Rights Agent, as the case may be, and to each transfer
agent of the Common Shares and Preferred Shares, by registered or certified
mail, and to the holders of the Rights Certificates by first-class mail. If
the Rights Agent shall resign or be removed or shall otherwise become
incapable of acting, the Company shall appoint a successor to the Rights
Agent. If the Company shall fail to make such appointment within a period of
thirty (30) days after giving notice of such removal or after it has been
notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Rights Certificate (who
shall, with such notice, submit his Rights Certificate for inspection by the
Company), then any registered holder of any Rights Certificate may apply to
any court of competent jurisdiction for the appointment of a new Rights Agent.
Any successor Rights Agent, whether appointed by the Company or by such a
court, shall be (a) a Person organized, doing business and in good standing
under the laws of the United States or of any state, having a principal office
in the State of New York or the Commonwealth of Pennsylvania, that is
authorized by law to exercise shareholder services and stock transfer powers
and is subject to supervision or examination by federal or state authority and
that has at the time of its appointment as Rights Agent a combined capital and
surplus of at least $50,000,000 or (b) an Affiliate of any such Person. After
appointment, the successor Rights Agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named as
Rights Agent without further act or deed; but the predecessor Rights Agent
shall deliver and transfer to the successor Rights Agent any property at the
time held by it hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later than the
effective date of any such appointment, the Company shall file notice thereof
in writing with the predecessor Rights Agent and each transfer agent of the
Common Shares and Preferred Shares and mail a notice thereof in writing to the
registered holders of the Rights Certificates or, prior to the Distribution
Date, to the registered holders of the Common Shares. In case at the time such
successor Rights Agent shall succeed to the agency and trust created by this
Agreement, any of the Rights Certificates shall have been countersigned but
not delivered, any such successor Rights Agent may adopt the countersignature
of a predecessor Rights Agent and deliver such Rights Certificates so
countersigned; and in case at that time any of the Rights Certificates shall
not have been countersigned, any successor Rights Agent may countersign such
Rights Certificates either in the name of the predecessor or in the name of
the successor Rights Agent; and in all such cases such Rights Certificates
shall have the full force provided in the Rights Certificates and in this
Agreement. Failure to give any notice provided for in this Section 21,
however, or any defect therein, shall not affect the legality or
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validity of the resignation or removal of the Rights Agent or the appointment
of the successor Rights Agent, as the case may be.
Section 22. Issuance of New Rights Certificates.
Notwithstanding any of the provisions of this Agreement or of the Rights to
the contrary, the Company may, at its option, issue new Rights Certificates
evidencing Rights in such form as may be approved by its Board of Directors to
reflect any adjustment or change in the Purchase Price and the number or kind
or class of shares or other securities or property purchasable under the
Rights Certificates made in accordance with the provisions of this Agreement.
In addition, in connection with the issuance, sale or delivery of Common
Shares following the Distribution Date and prior to the redemption or
expiration of the Rights, the Company (a) shall, with respect to Common Shares
so issued, sold or delivered pursuant to the exercise of stock options, stock
appreciation rights, grants or awards outstanding on the Distribution Date
under any benefit plan or arrangement for employees or directors, or upon the
exercise, conversion or exchange of securities outstanding on the Record Date
or hereinafter issued by the Company, and (b) may, in any other case, if
deemed necessary or appropriate by the Board of Directors of the Company,
issue Rights Certificates representing the appropriate number of Rights in
connection with such issuance or sale; provided, however, that (i) no such
Rights Certificate shall be issued if, and to the extent that, the Company
shall be advised by counsel that such issuance would create a significant risk
of material adverse tax consequences to the Company or the Person to whom such
Rights Certificate would be issued, and (ii) no such Rights Certificate shall
be issued if, and to the extent that, appropriate adjustment shall otherwise
have been made in lieu of the issuance thereof.
Section 23. Redemption and Termination.
(a) The Board of Directors of the Company may, at
its option, at any time prior to the earlier of (i) the Close of Business on
the tenth day following a Stock Acquisition Date (or, if the Stock Acquisition
Date shall have occurred prior to the Record Date, the Close of Business on
the tenth day following the Record Date), or (ii) the Close of Business on the
Final Expiration Date, redeem all but not less than all the then outstanding
Rights at a redemption price of $.01 per Right, as such amount may be
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such redemption price being
hereinafter referred to as the "Redemption Price") and the Company may, at its
option, pay the Redemption Price either in Common Shares (based on the
"current market price", as defined in Section 11(d)(i) hereof, of the Common
Shares at the time of redemption) or cash; provided, however, if the Board of
Directors of the Company authorizes redemption of the Rights in either of the
circumstances set forth in clauses (i) and (ii) of this proviso, then there
must be Continuing Directors then in office and such authorization shall
require the concurrence of a majority of such
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Continuing Directors; and provided further, however, that if, following the
occurrence of a Stock Acquisition Date and following the expiration of the
right of redemption hereunder but prior to any Triggering Event, (i) an
Acquiring Person shall have transferred or otherwise disposed of a number of
Common Shares in one transaction or series of transactions, not directly or
indirectly involving the Company or any of its Subsidiaries, which did not
result in the occurrence of a Triggering Event or the Company (with the
approval of the majority of Continuing Directors) shall have issued additional
equity securities, in either instance such that such Person is thereafter a
Beneficial Owner of 10% or less of the outstanding Common Shares, and (ii)
there is no other Acquiring Person immediately following the occurrence of the
event described in clause (i), then the right of redemption shall be
reinstated and thereafter be subject to the provisions of this Section 23.
Notwithstanding anything contained in this Agreement to the contrary, the
Rights shall not be exercisable after the first occurrence of a Section
11(a)(ii) Event until such time as the Company's right of redemption hereunder
has expired.
(b) Immediately upon the action of the Board of
Directors of the Company ordering the redemption of the Rights, without any
notice, or further action, the right to exercise the Rights will terminate and
the only right thereafter of the holders of Rights shall be to receive the
Redemption Price for each Right so held. Promptly after the action of the
Board of Directors ordering the redemption of the Rights, the Company shall
give notice of such redemption to the Rights Agent and the holders of the then
outstanding Rights by, in the case of notice to holders, mailing such notice
to all such holders at each holder's last address as it appears upon the
registry books of the Rights Agent or, prior to the Distribution Date, on the
registry books of the Transfer Agent for the Common Shares. Any notice that is
mailed in the manner herein provided shall be deemed given, whether or not the
holder receives the notice. Each such notice of redemption will state the
method by which the payment of the Redemption Price will be made.
Section 24. Exchange.
(a) The Board of Directors of the Company may, at
its option, at any time after any Person becomes an Acquiring Person, exchange
all or part of the then outstanding and exercisable Rights (which shall not
include Rights that have become null and void pursuant to the provisions of
Section 7(e) hereof) for Common Shares at an exchange ratio of one Common
Share per Right, appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date hereof (such exchange
ratio being hereinafter referred to as the "Exchange Ratio"). Notwithstanding
the foregoing, the Company's Board of Directors shall not be empowered to
effect such exchange at any time after any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or any
such Subsidiary, or any Person organized, appointed or established by the
Company for or pursuant to
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the terms of any such plan), together with all Affiliates and Associates of
such Person, becomes the Beneficial Owner of fifty percent (50%) or more of
the Common Shares then outstanding.
(b) Immediately upon the action of the Board of
Directors of the Company ordering the exchange of any Rights pursuant to
subsection (a) of this Section 24 and without any further action and without
any notice, the right to exercise such Rights shall terminate and the only
right thereafter of the holders of such Rights shall be to receive that number
of Common Shares equal to the number of such Rights held by such holder
multiplied by the Exchange Ratio. The Company shall promptly give public
notice of any such exchange; provided, however, that the failure to give, or
any defect in, such notice shall not affect the validity of such exchange. The
Company shall promptly notify the Rights Agent of any such exchange. The
Company promptly shall mail a notice of any such exchange to all of the
holders of such Rights at their last addresses as they appear upon the
registry books of the Rights Agent. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives the
notice. Each such notice of exchange will state the method by which the
exchange of the Common Shares for Rights will be effected and, in the event of
any partial exchange, the number of Rights which will be exchanged. Any
partial exchange shall be effected pro rata based on the number of Rights
(other than Rights which have become void pursuant to the provisions of
Section 7(e) hereof) held by each holder of Rights.
(c) In the event that there shall not be sufficient
Common Shares issued but not outstanding or authorized but issued to permit
any exchange of Rights as contemplated in accordance with this Section 24, the
Company shall take all such action as may be necessary to authorize additional
Common Shares for issuance upon exchange of the Rights.
(d) The Company shall not be required to issue
fractions of Common Shares or to distribute certificates which evidence
fractional Common Shares. In lieu of such fractional Common Shares, there
shall be paid to the registered holders of the Rights Certificates with regard
to which such fractional Common Shares would otherwise be issuable, an amount
in cash equal to the same fraction of the current market value of a whole
Common Share. For the purposes of this subsection (d), the current market
value of a whole Common Share shall be the closing price of a Common Share (as
determined pursuant to the second sentence of Section 11(d) hereof) for the
Trading Day immediately prior to the date of exchange pursuant to this Section
24.
Section 25. Notice of Certain Events.
(a) In case the Company shall propose, at any time
after the Distribution Date, (i) to pay any dividend payable in stock of any
class to the holders of Preferred
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Shares or to make any other distribution to the holders of Preferred Shares
(other than a regular quarterly dividend out of earnings or retained earnings
of the Company), or (ii) to offer to the holders of Preferred Shares rights or
warrants to subscribe for or to purchase any additional Preferred Shares or
shares of stock of any class or any other securities, rights or options, or
(iii) to effect any reclassification of its Preferred Shares (other than a
reclassification involving only the subdivision of outstanding Preferred
Shares), or (iv) to effect any consolidation or merger into or with any other
Person (other than a Subsidiary of the Company in a transaction which complies
with Section 11(o) hereof), or to effect any sale or other transfer (or to
permit one or more of its Subsidiaries to effect any sale or other transfer),
in one transaction or a series of related transactions, of more than 50% of
the assets or earning power of the Company and its Subsidiaries (taken as a
whole) to any other Person or Persons (other than the Company and/or any of
its Subsidiaries in one or more transactions each of which complies with
Section 11(o) hereof), or (v) to effect the liquidation, dissolution or
winding up of the Company, then, in each such case, the Company shall give to
the Rights Agent and to each holder of a Rights Certificate, to the extent
feasible and in accordance with Section 26 hereof, a notice of such proposed
action, which shall specify the record date for the purposes of such stock
dividend, distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution, or winding up is to take place and the date of participation
therein by the holders of Preferred Shares, if any such date is to be fixed,
and such notice shall be so given in the case of any action covered by clause
(i) or (ii) above at least twenty (20) days prior to the record date for
determining holders of Preferred Shares for purposes of such action, and in
the case of any such other action, at least twenty (20) days prior to the date
of the taking of such proposed action or the date of participation therein by
the holders of Preferred Shares, whichever shall be the earlier.
(b) Upon the occurrence of a Section 11(a)(ii)
Event, (i) the Company shall as soon as practicable thereafter give to each
holder of a Rights Certificate, to the extent feasible and in accordance with
Section 26 hereof, a notice of the occurrence of such event, which shall
specify the event and the consequences of the event to holders of Rights under
Section 11(a)(ii) hereof, and (ii) all references in the preceding paragraph
to Preferred Shares shall be deemed thereafter to refer to Common Shares
and/or, if appropriate, other securities.
Section 26. Notices. Notices or demands authorized by this
Agreement to be given or made by the Rights Agent or by the holder of any
Rights Certificate to or on the Company shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed (until another address is
filed in writing with the Rights Agent) as follows:
Philadelphia Suburban Corporation
762 Lancaster Avenue
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<PAGE>
Bryn Mawr, Pennsylvania 19010
Attention: Corporate Secretary
Subject to the provisions of Section 21, any notice or demand authorized by
this Agreement to be given or made by the Company or by the holder of any
Rights Certificate to or on the Rights Agent shall be sufficiently given or
made if sent by first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Company) as follows:
ChaseMellon Shareholder Services, L.L.C.
85 Challenger Road
Ridgefield Park, NJ 07660-2108
Attention: General Counsel
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate (or, if
prior to the Distribution Date to the holder of certificates representing
Common Shares) shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed to such holder at the address of such holder
as shown on the registry books of the Company.
Section 27. Supplements and Amendments. Prior to the
Distribution Date and subject to the penultimate sentence of this Section 27,
the Company may and the Rights Agent shall, if the Company so directs,
supplement or amend any provision of this Agreement without the approval of
any holders of certificates representing Common Shares. From and after the
Distribution Date and subject to the penultimate sentence of this Section 27,
the Company may and the Rights Agent shall, if the Company so directs,
supplement or amend this Agreement without the approval of any holders of
Rights Certificates in order (i) to cure any ambiguity, (ii) to correct or
supplement any provision contained herein which may be defective or
inconsistent with any other provisions herein, (iii) to shorten or lengthen
any time period hereunder, or (iv) to change or supplement the provisions
hereunder in any manner that the Company may deem necessary or desirable and
that shall not adversely affect the interests of the holders of Rights
Certificates; provided, this Agreement may not be supplemented or amended to
lengthen, pursuant to clause (iii) of this sentence, (A) a time period
relating to when the Rights may be redeemed at such time as the Rights are not
then redeemable, or (B) any other time period unless such lengthening is for
the purpose of protecting, enhancing or clarifying the rights of, and/or the
benefits to, the holders of Rights. Upon the delivery of a certificate from an
appropriate officer of the Company that states that the proposed supplement or
amendment is in compliance with the terms of this Section 27, and if requested
by the Rights Agent, an opinion of counsel, the Rights Agent shall execute
such supplement or amendment. Notwithstanding anything contained in this
Agreement to the contrary, (i) no supplement or amendment shall be made that
changes the
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<PAGE>
Redemption Price, the Final Expiration Date, the Purchase Price or the number
of Preferred Share Fractions for which a Right is exercisable, (ii) any
supplement or amendment shall be effective only if there are Continuing
Directors and shall require the concurrence of a majority of such Continuing
Directors if: (x) such supplement or amendment occurs on or after the time a
Person becomes an Acquiring Person, or (y) such supplement or amendment occurs
on or after the date of a change (resulting from a proxy or consent
solicitation) in a majority of the directors in office at the commencement of
such solicitation if any Person who is a participant in such solicitation has
stated (or, if upon the commencement of such solicitation, a majority of the
Board of Directors of the Company has determined in good faith) that such
Person (or any of its Affiliates or Associates) intends to take, or may
consider taking, any action that would result in such Person becoming an
Acquiring Person or that would cause the occurrence of a Triggering Event
unless, concurrent with such solicitation, such Person (or one or more of its
Affiliates or Associates) is making a cash tender offer pursuant to a Schedule
14D-1 (or any successor form) filed with the Securities and Exchange
Commission for all outstanding Common Shares not beneficially owned by such
Person (or by its Affiliates or Associates), and (iii) no supplement or
amendment that changes or increases the obligations and duties of the Rights
Agent under this Agreement shall be effective without the consent of the
Rights Agent. Prior to the Distribution Date, the interests of the beneficial
owners of Rights shall be deemed coincident with the interests of the holders
of Common Shares.
Section 28. Successors. All the covenants and provisions of
this Agreement by or for the benefit of the Company or the Rights Agent shall
bind and inure to the benefit of their respective successors and assigns
hereunder.
Section 29. Determinations and Actions by the Board of
Directors, etc. For all purposes of this Agreement, any calculation of the
number of Common Shares outstanding at any particular time, including for
purposes of determining the particular percentage of such outstanding Common
Shares of which any Person is the Beneficial Owner, shall be made in
accordance with the last sentence of Rule 13d-3(d)(1)(i) of the General Rules
and Regulations under the Exchange Act. The Board of Directors of the Company
(with, where specifically provided for herein, the concurrence of the
Continuing Directors) shall have the exclusive power and authority to
administer this Agreement and to exercise all rights and powers specifically
granted to the Board (with, where specifically provided for herein, the
concurrence of the Continuing Directors) or to the Company, or as may be
necessary or advisable in the administration of this Agreement, including,
without limitation, the right and power to (i) interpret the provisions of
this Agreement, and (ii) make all determinations deemed necessary or advisable
for the administration of this Agreement (including a determination to redeem
or not redeem the Rights or to amend or supplement the Agreement). All such
actions, calculations, interpretations and determinations (including, for
purposes of clause (y) below, all omissions
-42-
<PAGE>
with respect to the foregoing) that are done or made by the Board (with, where
specifically provided for herein, the concurrence of the Continuing Directors)
in good faith, shall (x) be final, conclusive and binding on the Company, the
Rights Agent, the holders of the Rights and all other Persons, and (y) not
subject the Board or the Continuing Directors to any liability to the holders
of the Rights. For purposes of this Agreement, the Rights Agent shall be
allowed to assume that all such actions, calculations, interpretations and
determinations have been done or made by the Board in good faith.
Section 30. Benefits of this Agreement. Nothing in this
Agreement shall be construed to give to any Person other than the Company, the
Rights Agent and the registered holders of the Rights Certificates (and, prior
to the Distribution Date, registered holders of the Common Shares) any legal
or equitable right, remedy or claim under this Agreement; but this Agreement
shall be for the sole and exclusive benefit of the Company, the Rights Agent
and the registered holders of the Rights Certificates (and, prior to the
Distribution Date, registered holders of the Common Shares).
Section 31. Severability. If any term, provision, covenant
or restriction of this Agreement is held by a court of competent jurisdiction
or other authority to be invalid, void or unenforceable for any purpose or
under any set of circumstances or as applied to any Person, such invalid, void
or unenforceable term, provision, covenant or restriction shall continue in
effect to the maximum extent possible for all other purposes, under all other
circumstances and as applied to all other Persons; and the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain
in full force and effect and shall in no way be affected, impaired or
invalidated; provided, however, that notwithstanding anything in this
Agreement to the contrary, if any such term, provision, covenant or
restriction is held by such court or authority to be invalid, void or
unenforceable and the Board of Directors of the Company determines in its good
faith judgment that severing the invalid language from this Agreement would
adversely affect the purpose or effect of this Agreement, the right of
redemption set forth in Section 23 hereof shall be reinstated and shall not
expire until the Close of Business on the tenth day following the date of such
determination by the Board of Directors. Without limiting the foregoing, if
any provisions requiring that a determination be made by less than the entire
Board (or at a time or with the concurrence of a group of directors consisting
of less than the entire Board) is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, such determination shall
then be made by the Board in accordance with applicable law and the Company's
Certificate of Incorporation and by-laws.
Section 32. Governing Law. This Agreement, each Right and
each Rights Certificate issued hereunder shall be deemed to be a contract made
under the laws of the Commonwealth of Pennsylvania and for all purposes shall
be governed by and construed in
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<PAGE>
accordance with the laws of such jurisdiction applicable to contracts made and
to be performed entirely within such jurisdiction; except that all provisions
regarding the rights, duties and obligations of the Rights Agent shall by
governed by and construed in accordance with the laws of the State of New York
applicable to contracts made and to be performed entirely within such
jurisdiction.
Section 33. Counterparts. This Agreement may be executed in
any number of counterparts and each of such counterparts shall for all
purposes be deemed to be an original, and all such counterparts shall together
constitute but one and the same instrument.
Section 34. Descriptive Headings. Descriptive headings of
the several Sections of this Agreement are inserted for convenience only and
shall not control or affect the meaning or construction of any of the
provisions hereof.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
PHILADELPHIA SUBURBAN CORPORATION
By /s/ Roy H. Stahl
------------------------------
Name: Roy H. Stahl
Title: Vice President and General Counsel
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
By /s/ Lynore LeConche
------------------------------
Name: Lynore LeConche
Title: Assistant Vice President
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<PAGE>
EXHIBIT A
RESOLUTION OF THE BOARD OF DIRECTORS OF
PHILADELPHIA SUBURBAN CORPORATION
ESTABLISHING AND DESIGNATING
SERIES A JUNIOR PARTICIPATING PREFERRED SHARES
AS A SERIES OF THE PREFERRED STOCK
RESOLVED, that pursuant to the authority expressly vested in the Board of
Directors of Philadelphia Suburban Corporation (the "Corporation") by Article
FIFTH of the Articles of Incorporation of the Corporation, the Board of
Directors hereby fixes and determines the voting rights, designations,
preferences, qualifications, privileges, limitations, restrictions, options,
conversion rights and other special or relative rights of the first series of
the Series Preferred Stock, par value $1.00 per share, which shall consist of
100,000 shares and shall be designated as Series A Junior Participating
Preferred Shares (the "Series A Preferred Shares").
Special Terms of the Series A Preferred Shares
Section 1. Dividends and Distributions.
(a) The rate of dividends payable per share of Series A
Preferred Shares on the first day of January, April, July and October in each
year or such other quarterly payment date as shall be specified by the Board
of Directors (each such date being referred to herein as a "Quarterly Dividend
Payment Date"), commencing on the first Quarterly Dividend Payment Date after
the first issuance of a share or fraction of a share of the Series A Preferred
Shares, shall be (rounded to the nearest cent) equal to the greater of (i)
$10.00 or (ii) subject to the provision for adjustment hereinafter set forth,
1,000 times the aggregate per share amount of all cash dividends, and 1,000
times the aggregate per share amount (payable in cash, based upon the fair
market value at the time the non-cash dividend or other distribution is
declared or paid as determined in good faith by the Board of Directors) of all
non-cash dividends or other distributions other than a dividend payable in
shares of Common Stock or a subdivision of the outstanding shares of Common
Stock (by reclassification or otherwise), declared on the Common Stock, $.50
par value per share, of the Corporation since the immediately preceding
Quarterly Dividend Payment Date, or, with respect to the first Quarterly
Dividend Payment Date, since the first issuance of any share or fraction of a
share of the Series A Preferred Shares. Dividends on the Series A Preferred
Shares shall be paid out of funds legally available for such purpose. In the
event the Corporation shall at any time after March 1, 1998 (the "Rights
Declaration Date") (i) declare any dividend on Common Stock payable in shares
of Common Stock, (ii) subdivide the outstanding shares of Common Stock, or
(iii) combine the outstanding shares of Common Stock into a smaller number of
shares, then in each such case the amounts to which holders of Series A
Preferred Shares were entitled immediately prior to such event under clause
(ii) of the preceding sentence shall be adjusted by multiplying each such
amount by a fraction the numerator of which
<PAGE>
is the number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.
(b) Dividends shall begin to accrue and be cumulative on
outstanding Series A Preferred Shares from the Quarterly Dividend Payment Date
next preceding the date of issue of such Series A Preferred Shares, unless the
date of issue of such shares is prior to the record date for the first
Quarterly Dividend Payment Date, in which case dividends on such shares shall
begin to accrue from the date of issue of such shares, or unless the date of
issue is a Quarterly Dividend Payment Date or is a date after the record date
for the determination of holders of Series A Preferred Shares entitled to
receive a quarterly dividend and before such Quarterly Dividend Payment Date,
in either of which events such dividends shall begin to accrue and be
cumulative from such quarterly Dividend Payment Date. Accrued but unpaid
dividends shall not bear interest. Dividends paid on the Series A Preferred
Shares in an amount less than the total amount of such dividends at the time
accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding.
Section 2. Voting Rights. In addition to any other voting
rights required by law, the holders of Series A Preferred Shares shall have
the following voting rights:
(a) Subject to the provision for adjustment hereinafter set
forth, each Series A Preferred Share shall entitle the holder thereof to 1,000
votes on all matters submitted to a vote of the shareholders of the
Corporation. In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding shares of Common Stock, or (iii)
combine the outstanding shares of Common Stock into a smaller number of
shares, then in each such case the number of votes per share to which holders
of Series A Preferred Shares were entitled immediately prior to such event
shall be adjusted by multiplying such number by a fraction the numerator of
which is the number of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such event.
(b) In the event that dividends upon the Series A Preferred
Shares shall be in arrears to an amount equal to six full quarterly dividends
thereon, the holders of such Series A Preferred Shares shall become entitled
to the extent hereinafter provided to vote noncumulatively at all elections of
directors of the Corporation, and to receive notice of all shareholders'
meetings to be held for such purpose. At such meetings, to the extent that
directors are being elected, the holders of such Series A Preferred Shares
voting as a class shall be entitled solely to elect two members of the Board
of Directors of the Corporation; and all other directors of the Corporation
shall be elected by the other shareholders of the Corporation entitled to vote
in the election of directors. Such voting rights of the holders of such Series
A Preferred Shares shall continue until all accumulated and unpaid dividends
thereon shall have been paid or funds sufficient therefor set aside, whereupon
all such voting rights of the holders of shares of such series shall cease,
A-2
<PAGE>
subject to being again revived from time to time upon the reoccurrence of the
conditions above described as giving rise thereto.
At any time when such right to elect directors separately as
a class shall have so vested, the Corporation may, and upon the written
request of the holders of record of not less than 20% of the then outstanding
total number of shares of all the Series A Preferred Shares having the right
to elect directors in such circumstances shall, call a special meeting of
holders of such Series A Preferred Shares for the election of directors. In
the case of such a written request, such special meeting shall be held within
90 days after the delivery of such request, and, in either case, at the place
and upon the notice provided by law and in the By-laws of the Corporation;
provided, that the Corporation shall not be required to call such a special
meeting if such request is received less than 120 days before the date fixed
for the next ensuing annual or special meeting of shareholders of the
Corporation. Upon the mailing of the notice of such special meeting to the
holders of such Series A Preferred Shares, or, if no such meeting be held,
then upon the mailing of the notice of the next annual or special meeting of
shareholders for the election of directors, the number of directors of the
Corporation shall, ipso facto, be increased to the extent, but only to the
extent, necessary to provide sufficient vacancies to enable the holders of
such Series A Preferred Shares to elect the two directors hereinabove provided
for, and all such vacancies shall be filled only by vote of the holders of
such Series A Preferred Shares as hereinabove provided. Whenever the number of
directors of the Corporation shall have been increased, the number as so
increased may thereafter be further increased or decreased in such manner as
may be permitted by the By-laws and without the vote of the holders of Series
A Preferred Shares, provided that no such action shall impair the right of the
holders of Series A Preferred Shares to elect and to be represented by two
directors as herein provided.
So long as the holders of Series A Preferred Shares are
entitled hereunder to voting rights, any vacancy in the Board of Directors
caused by the death or resignation of any director elected by the holders of
Series A Preferred Shares, shall, until the next meeting of shareholders for
the election of directors, in each case be filled by the remaining director
elected by the holders of Series A Preferred Shares having the right to elect
directors in such circumstances.
Upon termination of the voting rights of the holders of any
series of Series A Preferred Shares the terms of office of all persons who
shall have been elected directors of the Corporation by vote of the holders of
Series A Preferred Shares or by a director elected by such holders shall
forthwith terminate.
(c) Except as otherwise provided herein, in the Articles of
Incorporation of the Corporation or by law, the holders of Series A Preferred
Shares and the holders of Common Stock (and the holders of shares of any other
series or class entitled to vote thereon) shall vote together as one class on
all matters submitted to a vote of shareholders of the Corporation.
A-3
<PAGE>
Section 3. Reacquired Shares. Any Series A Preferred Shares
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued Series
Preferred Stock and may be reissued as part of a new series of Series
Preferred Stock to be created by resolution or resolutions of the Board of
Directors.
Section 4. Liquidation, Dissolution or Winding Up. In the
event of any voluntary or involuntary liquidation, dissolution or winding up
of the Corporation, the holders of Series A Preferred Shares shall be entitled
to receive the greater of (a) $100.00 per share, plus accrued dividends to the
date of distribution, whether or not earned or declared, or (b) an amount per
share, subject to the provision for adjustment hereinafter set forth, equal to
1,000 times the aggregate amount to be distributed per share to holders of
Common Stock. In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding shares of Common Stock, or (iii)
combine the outstanding shares of Common Stock into a smaller number of
shares, then in each such case the amount to which holders of Series A
Preferred Shares were entitled immediately prior to such event pursuant to
clause (b) of the preceding sentence shall be adjusted by multiplying such
amount by a fraction the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately prior
to such event.
Section 5. Consolidation, Merger, etc. In case the
Corporation shall enter into any consolidation, merger, combination or other
transaction in which the shares of Common Stock are exchanged for or changed
into other stock or securities, cash and/or any other property, then in any
such case the Series A Preferred Shares shall at the same time be similarly
exchanged or changed in an amount per share (subject to the provision for
adjustment hereinafter set forth) equal to 1,000 times the aggregate amount of
stock, securities, cash and/or any other property (payable in kind), as the
case may be, into which or for which each share of Common Stock is changed or
exchanged. In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding shares of Common Stock, or (iii)
combine the outstanding shares of Common Stock into a smaller number of
shares, then in each such case the amount set forth in the preceding sentence
with respect to the exchange or change of shares of Series A Preferred Shares
shall be adjusted by multiplying such amount by a fraction the numerator of
which is the number of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such event.
A-4
<PAGE>
Section 6. No Redemption. The Series A Preferred Shares
shall not be redeemable.
Section 7. Ranking. The Series A Preferred Shares shall rank
junior to all other series of the Corporation's Series Preferred Stock as to
the payment of dividends and the distribution of assets, unless the terms of
any such series shall provide otherwise.
Section 8. Fractional Shares. Series A Preferred Shares may
be issued in fractions of a share which shall entitle the holder, in
proportion to such holder's fractional shares, to exercise voting rights,
receive dividends, participate in distributions and to have the benefit of all
other rights of holders of Series A Preferred Shares.
A-5
<PAGE>
EXHIBIT B
[Form of Rights Certificate]
Certificate No. R- ___________ Rights
NOT EXERCISABLE AFTER MARCH 1, 2008 OR AFTER EARLIER REDEMPTION BY
THE COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF
THE COMPANY, AT $.01 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY
AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING
PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) AND ANY
SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID. [THE
RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE
BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON
OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS
ARE DEFINED IN THE RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHTS
CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND
VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF SUCH
AGREEMENT.]*
- ---------------
* The bracketed portion of the legend shall be inserted only if
applicable and shall replace the preceding sentence.
<PAGE>
PHILADELPHIA SUBURBAN CORPORATION
RIGHTS CERTIFICATE
This certifies that ___________________, or registered
assigns, is the registered owner of the number of Rights set forth above, each
of which entitles the owner thereof, subject to the terms, provisions and
conditions of the Rights Agreement, dated as of March 1, 1998 (the "Rights
Agreement"), between Philadelphia Suburban Corporation, a Pennsylvania
corporation (the "Company"), and ChaseMellon Shareholder Services, L.L.C., a
New Jersey limited liability company (the "Rights Agent"), to purchase from
the Company at any time prior to 5:00 P.M. (Philadelphia time) on March 1,
2008 at the office or offices of the Rights Agent designated for such purpose,
or its successors as Rights Agent, one one-thousandth of a fully paid,
nonassessable share of Series A Junior Participating Preferred Stock (the
"Preferred Share") of the Company, at a purchase price (the "Purchase Price")
of $90 per one one-thousandth of a Preferred Share (such fraction, a
"Preferred Share Fraction"), upon presentation and surrender of this Rights
Certificate with the Form of Election to Purchase and related Certificate duly
executed. Except as provided in Sections 11(q) and 13(e) of the Rights
Agreement, the Purchase Price shall be paid, at the option of the Company, in
cash or Common Stock, of the Company (the "Common Shares") having an
equivalent value. The number of Rights evidenced by this Rights Certificate
(and the number of Preferred Share Fractions that may be purchased upon
exercise thereof) set forth above, and the Purchase Price per Preferred Share
Fraction set forth above, are the number and Purchase Price as of March 1,
1998, based on the Preferred Shares as constituted at such date.
Except as otherwise provided in the Rights Agreement, upon
the occurrence of any Section 11(a)(ii) Event (as such term is defined in the
Rights Agreement), if the Rights evidenced by this Rights Certificate are
beneficially owned by (i) an Acquiring Person or Associate or Affiliate or
Associate of any Acquiring Person (as such terms are defined in the Rights
Agreement), (ii) a transferee of any Acquiring Person (of any such Associate
or Affiliate) who becomes a transferee after the Acquiring Person becomes
such, or (iii) under certain circumstances specified in the Rights Agreement,
a transferee of a person who, after such transfer, became an Acquiring Person,
or an Affiliate or Associate of an Acquiring Person, such Rights shall become
null and void and no holder hereof shall have any right with respect to such
Rights from and after the occurrence of any such Section 11(a)(ii) Event.
As provided in the Rights Agreement, the Purchase Price and
the number and kind of Preferred Shares or other securities that may be
purchased upon the exercise of the Rights evidenced by this Rights Certificate
are subject to modification and adjustment upon the happening of certain
events, including Triggering Events and a Section 11 (a) (ii) Event.
This Rights Certificate is subject to all of the terms,
covenants and restrictions of the Rights Agreement, which terms, covenants and
restrictions are hereby incorporated herein by
B-2
<PAGE>
reference and made a part hereof and to which Rights Agreement reference is
hereby made for a full description of the rights, limitations of rights,
obligations, duties and immunities hereunder of the Rights Agent, the Company
and the holders of the Rights Certificates, which limitations of rights
include the temporary suspension of the exercisability of such Rights under
the specific circumstances set forth in the Rights Agreement. Copies of the
Rights Agreement are on file at the above-mentioned office of the Rights Agent
and are also available upon written request to the Company.
This Rights Certificate, with or without other Rights
Certificates, upon surrender at the office of the Rights Agent designated for
such purpose, may be exchanged for another Rights Certificate or Rights
Certificates of like tenor and date evidencing Rights entitling the holder to
purchase a like aggregate number of Preferred Share Fractions as the Rights
evidenced by the Rights Certificate or Rights Certificates surrendered shall
have entitled such holder to purchase. If this Rights Certificate shall be
exercised in part, the holder shall be entitled to receive upon surrender
hereof another Rights Certificate or Rights Certificates for the number of
whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the
Rights evidenced by this Certificate may be redeemed by the Company at its
option at a redemption price of $.01 per Right at any time prior to the
earlier of the Close of Business (as such term is defined in the Rights
Agreement) on (i) the tenth day following the Stock Acquisition Date (as such
time period may be extended pursuant to the Rights Agreement), and (ii) the
Final Expiration Date. Under certain circumstances set forth in the Rights
Agreement, the decision to redeem shall require the concurrence of a majority
of the Continuing Directors.
No fractional Preferred Shares will be issued upon the
exercise of any Right or Rights evidenced hereby (other than fractions which
are integral multiples of a Preferred Share, which may, as the election of the
Company, be evidenced by depositary receipts), but in lieu thereof a cash
payment will be made, as provided in the Rights Agreement.
No holder of this Rights Certificate shall be entitled to
vote or receive dividends or be deemed for any purpose the holder of Preferred
Shares or of any other securities of the Company (including Common Shares)
that may at any time be issuable on the exercise hereof, nor shall anything
contained in the Rights Agreement or herein be construed to confer upon the
holder hereof, as such, any of the rights of a shareholder of the Company or
any right to vote for the election of directors or upon any matter submitted
to shareholders at any meeting thereof, or to give or withhold consent to any
corporate action, or, to receive notice of meetings or other actions affecting
shareholders (except as provided in the Rights Agreement), or to receive
dividends or subscription rights, or otherwise, until the Right or Rights
evidenced by this Rights Certificate shall have been exercised as provided in
the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for
any purpose until it shall have been countersigned by the Rights Agent.
B-3
<PAGE>
WITNESS the facsimile signature of the proper officers of
the Company and its corporate seal.
Dated as of ____________, 19__
ATTEST PHILADELPHIA SUBURBAN CORPORATION
____________________ By_______________________________
Secretary Title:
Countersigned
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
By____________________
Authorized Signature
B-4
<PAGE>
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate.)
FOR VALUE RECEIVED ________________________________________ hereby sells,
assigns and transfers unto _____________________________________________________
(Please print name and address of transferee)
________________________________________________________________________________
this Rights Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint ____________________________
Attorney, to transfer the within Rights Certificate on the books of the
within-named Company, with full power of substitution.
Dated: _________________, 19 __
_____________________________
Signature
Signature Guaranteed:
Certificate
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) this Rights Certificate [ ] is [ ] is not being sold,
assigned and transferred by or on behalf of a Person who is or was an
Acquiring Person or an Affiliate or Associate of any such Acquiring Person (as
such terms are defined pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this
Rights Certificate from any Person who is, was or subsequently became an
Acquiring Person or an Affiliate or Associate of an Acquiring Person.
Dated: ________________, 19__ ____________________________
Signature
Signature Guaranteed:
B-5
<PAGE>
NOTICE
The signatures to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
B-6
<PAGE>
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise
Rights represented by the Rights Certificate.)
To: PHILADELPHIA SUBURBAN CORPORATION:
The undersigned hereby irrevocably elects to exercise
________ Rights represented by this Rights Certificate to purchase the
Preferred Shares issuable upon the exercise of the Rights (or Common Shares or
such other securities of the Company or of any other person that may be
issuable upon the exercise of the Rights) and requests that certificates for
such shares be issued in the name of and delivered to:
Please insert social security
or other identifying number
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
If such number of Rights shall not be all the Rights
evidenced by this Rights Certificate, a new Rights Certificate for the balance
of such Rights shall be registered in the name of and delivered to:
Please insert social security
or other identifying number
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
________________________________________________________________________________
Dated: _____________, 19__
__________________________
Signature
Signature Guaranteed:
B-7
<PAGE>
Certificate
The undersigned hereby certifies by checking the appropriate
boxes that
(1) the Rights evidenced by this Rights Certificate [ ] are
[ ] are not being exercised by or on behalf of a Person who is or was an
Acquiring Person or an Affiliate or Associate of any such Acquiring Person (as
such terms are defined pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this
Rights Certificate from any Person who is, was or became an Acquiring Person
or an Affiliate or Associate of an Acquiring Person.
Dated: _____________, 19__ _________________________
Signature
Signature Guaranteed:
NOTICE
The signatures to the foregoing Election to Purchase and
Certificate must correspond to the name as written upon the face of this
Rights Certificate in every particular, without alteration or enlargement or
any change whatsoever.
B-8
<PAGE>
Donna Alston
Director, Communications
610.645.1095
FOR RELEASE: February 3, 1998
PHILADELPHIA SUBURBAN RENEWS SHAREHOLDER RIGHTS PLAN
BRYN MAWR, PA, February 3 -- Philadelphia Suburban Corporation
(PSC/NYSE) announced today that its Board of Directors has approved a new
Shareholder Rights Plan (the "Plan") to replace the Plan it originally adopted
in February 1988, which is due to expire March 1, 1998.
The Plan is designed to insure that all PSC shareholders receive fair
value for their Common Shares in the event of any proposed takeover of PSC and
to guard against the use of partial tender offers or other coercive tactics to
gain control of PSC without offering fair value to PSC's shareholders.
In connection with the adoption of the new Plan, the Company declared
a distribution on its shares of Common Stock (the "Common Stock") of Preferred
Share Purchase Rights (the "Rights") to shareholders of record on March 1,
1998. Shareholders will not immediately receive certificates for the Rights,
but the Rights will become part of each Common Share.
Each Right will entitle the holder to buy 1/1,000 of a share of
Series A Junior Participating Preferred Shares of PSC (the "Preferred Shares")
at an exercise price of $90.00. Each Preferred Share fraction is designed to
be equivalent in voting and dividend Rights to one Common Share. The new Plan,
which expires March 1, 2008, is substantially the same as the current plan
except that the beneficial ownership threshold that would trigger
exercisability of the Rights to purchase shares of the Company's Common Stock
will be 20 percent of the Company's outstanding Common Stock.
<PAGE>
A detailed summary of the terms of the new Plan is contained in a
Form 8-K which is being filed by the Company with the Securities and Exchange
Commission.
PSC, which is listed on the New York Stock Exchange under the ticker
symbol "PSC," is the third largest investor-owned water utility (by market
capitalization) and serves approximately 900,000 residents in 94
municipalities in Delaware, Montgomery, Chester and Bucks Counties in
southeastern Pennsylvania.
